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CREATING JOBS AND GROWING THE ECONOMY: 

LEGISLATIVE PROPOSALS TO STRENGTHEN THE 

ENTREPRENEURIAL ECOSYSTEM 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

AND ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

NOVEMBER 29, 2012 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED TWELFTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

OLYMPIA J. SNOWE, Maine, Ranking Member 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

JOHN F. KERRY, Massachusetts 

JOSEPH I. LIEBERMAN, Connecticut 

MARIA CANTWELL, Washington 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY R. HAGAN, North Carolina 

DAVID VITTER, Louisiana 

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RAND PAUL, Kentucky 

KELLY AYOTTE, New Hampshire 

MICHAEL B. ENZI, Wyoming 

SCOTT P. BROWN, Massachusetts 

JERRY MORAN, Kansas 

DONALD R. CRAVINS, JR., Democratic Staff Director and Chief Counsel 

WALLACE K. HSUEH, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Snowe, Hon. Olympia J., Ranking Member, and a U.S. Senator from Maine .... 6 

Moran, Hon. Jerry, a U.S. Senator from Kansas .................................................. 10 

WITNESSES

Panel I 

Greene, Sean, Associate Administrator for Investment and Senior Advisor 

for Innovation Policy, U.S. Small Business Administration ............................. 13 

Chodos, Michael, Associate Administrator for Entrepreneurial Development, 

U.S. Small Business Administration .................................................................. 21 

Panel II 

Gardiner, Scott, Executive Vice President, Granite State Economic Development Corporation ................................................................................................. 39 

Lindfors New, Fonda, Chief Executive Officer, Quaternary Resource Investigations, LLC ....................................................................................................... 46 

Etemadi, Joshua A., Sales Manager, Construction Bonds, Inc., a Division 

of Murray Securus, and Chair, Small and Emerging Business Committee, 

National Association of Surety Bond Producers ................................................ 53 

Clough, David R., State Director, Maine Chapter, National Federation of 

Independent Business .......................................................................................... 61 

Furchtgott-Roth, Diana, Senior Fellow, Manhattan Institute for Policy Research .................................................................................................................... 70 

Weeks, Julie R., President and Chief Executive Officer, Womenable, and 

Chair, Association of Women’s Business Centers .............................................. 83 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Association for Enterprise Opportunity 

Prepared statement .......................................................................................... 166 

Beutler, Brian 

Talking Points Memo ....................................................................................... 162 

Chodos, Michael 

Testimony .......................................................................................................... 21 

Prepared statement .......................................................................................... 23 

Clough, David R. 

Testimony .......................................................................................................... 61 

Prepared statement .......................................................................................... 63 

Etemadi, Joshua A. 

Testimony .......................................................................................................... 53 

Prepared statement .......................................................................................... 55 

Furchtgott-Roth, Diana 

Testimony .......................................................................................................... 70 

Prepared statement .......................................................................................... 72 

Gardiner, Scott 

Tesimony ........................................................................................................... 39 

Prepared statement .......................................................................................... 42 

Greene, Sean 

Testimony .......................................................................................................... 13 

Prepared statement .......................................................................................... 16 
Page

IV 

Landrieu, Hon. Mary L. 

Opening statement ........................................................................................... 1 

Responses to post-hearing questions from: 

Sean Greene ............................................................................................... 100 

Michael Chodos .......................................................................................... 104 

Fonda Lindfors New .................................................................................. 113 

Joshua A. Etemadi .................................................................................... 116 

David R. Clough ........................................................................................ 120 

LeClair, Lawrence E. 

Letter dated December 5, 2012, transmitting response to Senator 

Shaheen’s question ....................................................................................... 140 

Levin, Hon. Carl 

Responses to post-hearing questions from the Small Business Administration ................................................................................................................. 142 

Lindfors New, Fonda 

Testimony .......................................................................................................... 46 

Prepared statement .......................................................................................... 48 

Moran, Hon. Jerry 

Opening statement ........................................................................................... 10 

Mid-Tier Advocacy 

Prepared statement .......................................................................................... 172 

National Women’s Business Council 

Letter dated December 7, 2012, to Chair Landrieu ....................................... 164 

Snowe, Olympia J. 

Opening statement ........................................................................................... 6 

Responses to post-hearing questions from: 

Sean Greene ............................................................................................... 121 

Michael Chodos .......................................................................................... 124 

Fonda Lindfors New .................................................................................. 135 

David R. Clough ........................................................................................ 139 

Weeks, Julie R. 

Testimony .......................................................................................................... 83 

Prepared statement .......................................................................................... 85 

Weiss, Robert F. and Laura 

Paper titled ‘‘The Innovation Network’’ .......................................................... 149 

Women Impacting Public Policy 

Prepared statement .......................................................................................... 176 
(1) 

CREATING JOBS AND GROWING 

THE ECONOMY: LEGISLATIVE PROPOSALS 

TO STRENGTHEN THE ENTREPRENEURIAL 

ECOSYSTEM 

THURSDAY, NOVEMBER 29, 2012 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in Room 

SR–428A, Russell Senate Office Building, Hon. Mary L. Landrieu, 

Chair of the Committee, presiding. 

Present: Senators Landrieu, Shaheen, Snowe, Risch, Rubio, 

Ayotte, and Moran. 

OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, 

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good morning, and I thank everyone for joining 

us for this hearing this morning at our Small Business Committee, 

Creating Jobs and Growing the Economy: Legislative Proposals to 

Strengthen our Entrepreneurial Ecosystem in the United States. 

I apologize for being a few minutes late. We were taking some, 

what I hope and think will be, historic photographs in the back 

with my so able and wonderful Ranking Member and our staff, because this is a very special meeting for Senator Snowe. Welcome, 

Senator Shaheen. Thank you for joining us. 

So I want to say good morning to everyone and I would like to 

thank our witnesses for being here. We are looking forward to your 

testimony before our Small Business Committee this morning. 

But before we begin to talk about what is on the agenda today, 

I want to take a point of personal privilege, and let me acknowledge that this is our Ranking Member, Olympia Snowe of Maine, 

who is attending her final Small Business Committee hearing. We 

did not add up how many Small Business Committee hearings she 

has attended. That would be extremely difficult. It has got to be 

over the 100s, both here, on Commerce, and in Finance, and she 

has served for literally decades here in the Senate, some years in 

the House, and as a legislator in Maine. So we did not even attempt, but trust me, it will be hundreds if not thousands of hearings. 

Let me say it has been a privilege, Senator, to lead this committee with you. In 2009, we made history by becoming the first 

two female lawmakers to ever be Chair and Ranking Member of 
2 

any standing committee in Congress and we are really very proud 

of that milestone. We hope there will be many more to follow. But 

it is something that the two of us have been very proud of, and our 

close working relationship, as well. During the four years leading 

this committee together, there were many tough battles, but more 

than not, they resulted in important victories on behalf of small 

businesses in Maine, in Louisiana, and throughout this country. 

For nearly four decades, Senator Snowe has proved time and 

time again to be a hard working, dedicated public servant and a 

role model for men and women alike, and she has demonstrated 

time and time again the art of political compromise, a skill, I might 

say, that is required in any democratic form of government. 

In 1978, at the age of 31, she was elected to represent Maine’s 

Second Congressional District, making her the youngest Republican woman ever elected to Congress. In 1994, she won her first 

Senate election and became only the second woman to represent 

Maine in the Senate, following ably in the large footsteps of Margaret Chase Smith. During her 18 years in the Senate, she has 

earned a reputation as an extremely intelligent, well informed, and 

able legislator who knows how to tackle the toughest issues and get 

the job done. In 2006, we will remember that Time Magazine 

named her as one of the top ten United States Senators, quite an 

accomplishment. 

Aside from the important work, Senator, that you have done both 

as Chair and Ranking Member of this committee—and your contribution has been enormous—you have been a leader on so many 

important national issues, from national defense, to tax policy, to 

education, to women’s health, welfare reform, and campaign finance reform, just to name a few. But your true strength as a legislator comes from how hard you fought for your State of Maine and 

how you have used your experiences in Maine as a legislator, as 

a person who knows your State well, to extrapolate their experiences and the struggles of the small businesses in Maine to bring 

that experience to the nation. 

A great example was in 2005, when you led a successful fight to 

overturn the Pentagon’s decision to close Portsmouth Naval Shipyard and the Defense Finance and Accounting Service Center in 

Limestone. You also fought to ensure Maine got Federal assistance 

needed after disasters of the ice storms in 1998 and the 2006 flood 

that struck the Southern part of your State. So you are not unfamiliar with those kinds of local challenges and you have stepped 

up. 

The void left by your departure in the Senate will not be easily 

filled. American small businesses are losing a strong champion in 

the United States Senate. The people of Maine are losing a tireless 

advocate. And Congress is losing yet another voice of reason and 

moderation, a voice willing to speak to those on the other side of 

the aisle and to work for what is in the best interest of the American public. 

So I want to just say, Senator, what a privilege it has been to 

serve with you, how much our committee and the Senate is going 

to miss you, and we so appreciate your service to our nation. And 

can we give a standing ovation. 

[Applause.] 
3 

Senator SNOWE. Thank you. 

Chair LANDRIEU. And if any of the other members want to add 

just a comment now, it would be appropriate, and then we will go 

into some opening statements. Senator Moran. 

Senator MORAN. Madam Chairman, thank you very much, and I 

join you in your tribute to my colleague from Maine and thank her 

for her public service, exemplary public service. I regret that my 

time in the Senate with you overlapped only two years. I regret 

that you will not be my senior colleague much longer. I wish you 

well in the next step of your life. Know that only care and concern 

will continue for the people of Maine and the people of this country, 

and thank you for being a role model for how the Senate can and 

should operate. 

Thank you, Madam Chairman. 

Chair LANDRIEU. Senator Shaheen. 

Senator SHAHEEN. Thank you, Senator Landrieu. 

I want to echo Chair Landrieu’s remarks about what a privilege 

it has been to serve with you, Senator Snowe. You are not only a 

colleague, but you are a neighbor, and I know how much the people 

of Maine and the people of New Hampshire will miss your service 

here. 

As Senator Landrieu pointed out, when Portsmouth Naval Shipyard was under a BRAC closing announcement, you were one of 

the people who helped make sure the shipyard is still there and we 

will miss that advocacy. And for small businesses, not only in 

Maine but throughout New England, in particular, your loud voice 

here to make sure that concerns of small businesses have been addressed will really be missed. 

And on a personal level, I just want to say how much I appreciated your willingness to come over to New Hampshire to listen. 

The hearings that we did together in Maine and New Hampshire 

were really important to me and to the small businesses in my 

State. So we will all miss you and especially miss your ability to 

work with people of all ideologies here in the Senate and to forge 

a compromise. There is not enough of that, as has been said already. So I hope as you leave, the example that you have set will 

be one that all of us can follow. 

Chair LANDRIEU. Thank you. 

Let me go into my opening statement, and then, Senator, we will 

have a response from you. 

When I took over as Chair of this committee in January of 2009, 

our country was facing the worst economic recession since the 

Great Depression. The U.S. economy had lost 818,000 jobs in that 

month alone. From September 2008 through the end of 2009, the 

Great Recession wiped out seven million American jobs. In the face 

of tightening credit markets, insufficient resources to assist small 

businesses, small businesses were struggling to keep their doors 

open, and the primary agency responsible for assisting them, the 

Small Business Administration, was itself struggling to keep up 

with the demand after laboring under significant budget cuts that 

had happened in the previous years. 

At the time, this committee faced the enormous challenge of increasing the Federal Government’s capacity to assist small businesses and ensuring they maintain their historic role as key job 
4 

creators and innovators, spurring our economy, and we had to do 

this without substantially adding to our nation’s increasing debt. It 

was an enormous challenge, but not an impossible one, and one 

that I think that we have met through an aggressive legislative 

agenda, and we are continuing to meet that today. 

After passing the 2009 American Recovery and Reinvestment 

Act, in which this committee was actively involved, we continue 

with one of the most substantial pieces of small business legislation, the Small Business Job Act. This bill was a prime example 

of the role this committee played and continues to play in ensuring 

the future economic success of America’s small business. This bill 

added billions of dollars of lending and investment to America’s entrepreneurs and provided $12 billion in tax relief to small businesses from coast to coast at a time when they need it the most, 

and, of course, in conjunction with our Finance Committee. 

In addition, recognizing that less than one percent of small businesses export, this bill expanded trade and export opportunities to 

provide real and timely assistance for them to find new markets 

when the markets at home were diminishing. 

Finally, the bill increased small business access to Federal contracts, expanded counseling and technical assistance programs by 

partnering with hundreds of nonprofits throughout the country, 

thus leveraging our muscle without having to add millions of dollars to undergird that. 

Since the passage of SBJA, the Small Business Administration supported approximately $60 billion in lending over the last two 

years, which were two of the highest SBA lending years on record. 

It has financed almost 2,424 small business commercial mortgages 

totaling more than $2.3 billion in the commercial mortgage refinancing program. And I might say, Senator Snowe was one of the 

leading voices on this provision. This helped contribute to the highest 504 lending year of all time, which supported over $15 billion 

in lending to small and medium businesses. 

SBA successfully rolled out its first round of State Trade and Export Promotion, STEP grants, in 2011 to 47 States, four territories, 

totaling $30 million. STEP grants maximize the Federal-State-local 

resources to help small businesses export. In Louisiana, we received an $85,000 grant, one of the largest, and our Governor, of 

course, who is a Republican, and his team have praised that effort 

and say it is one of the most important grants that our State has 

received to help them in their efforts to support small businesses 

in Louisiana. 

The SBA has 20 new micro lenders on board to participate in the 

Intermediary Lending Program championed by Senator Levin. The 

ILP created in this bill is a three-year pilot project to provide direct 

loans to eligible nonprofit intermediaries for the purpose of making 

small business loans up to $200,000 for start-ups and growing 

small businesses. What a need there is for this in the country. We 

see it every day in small businesses with four or five employees 

that are having just a heck of a time getting that next $30,000 or 

$50,000 or $150,000 to expand, to buy the equipment necessary to 

hire that next one or two persons. We are going to work on that. 

The U.S. Department of Treasury has approved $1.4 billion for 

State Small Business Credit Initiatives under the SSBC programs 
5 

and under the State Small Business Credit Initiatives, again promoted by members of this committee. Treasury distributed $4.2 billion in the Small Business Lending Fund for community banks. We 

have now almost doubled, Senator Snowe, the number of banks 

using the SBA programs since a low of several years ago, and you 

have really been a leader in that effort, along with me. 

One of the major accomplishments, and again, this was with Senator Snowe’s great help and support, was an eight-year—not twoyear, not four-year, but an eight-year—reauthorization of the Small 

Business Research Innovation Program, SBIR and STTR, two of 

the most effective small business research programs in the nation 

that support our small businesses, collaborate with our universities, and get new, emerging ideas, technology, services, and goods 

to the marketplace. 

The SUCCESS Act, which is pending now, received 57 votes before we left. It paints a picture of how far we have come in the last 

several years. The results of these recommendations in the SUCCESS Act, which is Success Ultimately Comes from Capital, Contracting, Education, Strategic Partnerships, and Smart Regulations 

bill, the SUCCESS Act of 2012 received 57 votes on July 12 as part 

of Senate Amendment 2521 to the Small Business Jobs and Tax 

Relief Act of 2012. Five Republicans, including the Ranking Member Snowe and Senator Vitter, supported this Act on the floor. It 

is pending now before the Senate. We want to continue to work on 

this to move it forward. 

I am just going to mention a few things in closing. In that bill, 

which hopefully will be under consideration, Senator, in whatever 

grand bargain there may be, it extends 100 percent capital gains 

tax relief on qualifying investment for small business stocks, doubles the existing deduction for start-up costs for entrepreneurs, 

temporarily reduces the S Corporation is required to hold its assets 

after converting from a C Corporation which effectively frees up 

capital for these businesses. It allows small businesses to carry 

back business credits, which helps them, and extend the availability of enhanced Section 179, all very familiar to Senator Snowe. 

She has promoted these on the Finance Committee and we have 

put them forward as the best things we can do in the tax code to 

help small businesses continue to advance. 

Let me just say, one key provision that is attached or an addendum, potentially, to the SUCCESS Act is Expanding Access to Capital for Entrepreneurial Leaders that we introduced earlier this 

year, Senator Snowe and I. The EXCEL Act would modify the 

Small Business Investment Company program to raise the amount 

of SBIC debt the Small Business Administration can guarantee 

from $3 billion to $4 billion. The President has called on us to do 

this. It would also increase from $225 million to $350 million the 

amount of SBA guaranteed debt. Another key part of the SUCCESS Act would extend for one year a provision allowing small 

business owners to use the 504 loans, et cetera, et cetera. 

And in addition, the TEAM Act is pending, and the only thing 

I will say about this Act is it stands for Today’s Entrepreneurs are 

America’s Mentors, that entrepreneurship is not just about capital. 

It is not just about access to capital or loans or equity. It is also 

about receiving the right technical assistance. So the business 
6 

owner may know their product well. They may know their service 

well, Senator. But they do not really have the knowledge or technical ability to move their company from an eight-person employer 

to 16 or to 24, and mentorship. Now, does the government have to 

do that completely on their own? Absolutely not. But our government needs to be supporting the nonprofit mentors that are out 

there, and there are hundreds of thousands at universities, at our 

Small Business Entrepreneurship Centers, at the Women’s Centers 

that you have championed and literally been—I mean, we should 

name that program after you, which is a good idea. You have 

championed it so strongly. But, you know, entrepreneurs need cash 

and money and they also need advice, mentorship, and technical 

assistance. 

So those are just some of the things that are pending before our 

committee today. I wanted to start with that because today’s hearing is about the ideas that are pending, other ideas that members 

of this committee have that can continue to support the entrepreneurship drive that is helping to revive our economy today in the 

United States and to see what our committee can do to continue 

to pass legislation when it is in our jurisdiction, and if not, at least 

to use this committee as a platform to promote good ideas in hopes 

that other committees will pick up those ideas and march forward. 

So let me recognize Senator Snowe for opening remarks and then 

we will get right into the testimony this morning. 

OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, RANKING 

MEMBER, AND A U.S. SENATOR FROM MAINE 

Senator SNOWE. Well, thank you, Chair Landrieu, most of all for 

those very kind, gracious, and generous words. It is hard to believe 

that this is my final Small Business Committee hearing. It has certainly been a tremendous privilege to work with you and to have 

made history, as you said, as the first women to serve simultaneously both as Chair and Ranking Member of any standing committee in both the U.S. House of Representatives and the United 

States Senate. 

I have immensely enjoyed our partnership and working on 

issues. No one has been more devoted to championing small businesses than Chair Landrieu. And so it has been a special pleasure 

to be able to work with you and alongside you on so many of the 

critical issues facing our nation’s small businesses. You have been 

an exceptional partner and I want to express my enormous gratitude to you for creating that collegiality and the collaborative environment in which we have been able to develop so many significant 

initiatives that benefit small businesses, certainly in my State of 

Maine, your State of Louisiana, and all across the country, because 

without small businesses, we truly cannot have a recovery. 

So I just want to let you know that I will never forget the opportunity to work with you and to have had this special time in working on these issues that have been certainly important to me and 

to my State throughout my tenure of, I hesitate to say, 34 years 

in both the House and Senate. 

And I also want to express my gratitude to the fellow committee 

members, Senator Shaheen, which we do have a special partnership. We are neighboring States. We share Kittery-Portsmouth 
7 

Naval Shipyard. I call it Kittery-Portsmouth Naval Shipyard. It is 

in Kittery, but that is a matter of dispute. 

[Laughter.] 

On their side. We know where it is. 

[Laughter.] 

But it has been a joy to work with Senator Shaheen because I 

know how much she cares about small businesses and has been totally devoted to this issue. 

And to my colleagues on the Republican side, thank you for giving me the opportunity to serve as both Chair and Ranking Member of this committee for the last decade when I assumed the 

Chairmanship from then-Senator Kit Bond from the State of Missouri, and I want to thank you for your kind remarks, Senator 

Moran. I have enjoyed getting to know you, as well. I know you are 

committed to small businesses and you are devoted to doing the 

things that are so important to making them the engine that drives 

this economy, and for working with you overall and collaborating. 

So I really appreciate that. 

And to Senator Rubio, it is great to have this great team on our 

side and working on these issues that matter to our respective 

States, and so I want to thank you, as well, for giving me this opportunity. 

And I also want to recognize two committee members who will 

no longer be serving here, as well, because they are retiring, Senator Brown from Massachusetts. He has been a very active member 

of this committee and was instrumental in providing the leadership 

to addressing the issue of the withholding requirement of three 

percent from government contractors that became law, which was 

certainly essential. 

And also to Senator Lieberman, with whom I have worked on 

manufacturing issues—in fact, we co-chaired the Manufacturing 

Task Force—and worked on so many issues on a bipartisan basis, 

including the Chair, I might add, because we co-chaired the Common Ground Coalition, as well, to build that bipartisan consensus 

that is so critical. 

As my final term draws to a close, I want to say how proud I 

am of the work that we have accomplished over the years. When 

I was Chair following Hurricane Katrina and the government’s failure to respond to its devastation in the Gulf, and in particular in 

the Chair’s home State of Louisiana, we worked hand in glove to 

reform the SBA’s disaster programs and fought to assist the individuals and small businesses recovering. 

And in reaction to the credit crisis of 2008 and beyond, again, we 

worked mightily and vigorously to collaborate to enact measures 

that were credited for helping the SBA support over $30 billion in 

lending in 2011, which was the highest mark in the agency’s history. 

The Small Business Jobs Act of 2010 included numerous measures that we worked alongside and drafted together to make sure 

that this legislation would get enacted, and including provisions to 

provide vital tax relief to small firms, comprehensive export provisions to assist small businesses in reaching foreign customers, and 

crucial limitations on contract bundling so small businesses have 

greater access to Federal contracts. 
8 

And late last year, as the Chair mentioned, we passed legislation, and thanks to the leadership of the Chair, we authorized the 

Small Business Innovative Research Program and the STTR for an 

additional six years so small firms would continue to receive the 

valuable Federal research dollars for years to come. 

Looking back at my own service on the Small Business Committee, and the Chair mentioned it would be very difficult to add 

up the number of hearings that I attended in Small Business Committees, and I think it would be very difficult since I have served 

on the Small Business Committee since my very first days in the 

U.S. Congress starting in 1979, and, in fact, several of my senior 

staff were kind enough to inform me that that was before they 

were even born. 

[Laughter.] 

Hard to imagine that, is it not? But I cannot think of any higher 

priority than being a megaphone for the 150,000 small businesses 

in my State of Maine and, of course, the more than 30 million 

small businesses nationwide. 

As we all know, small businesses are willing to take risks that 

others will not. They have their fingers on the pulse of their local 

communities. And that is one of the reasons I have made Main 

Street tours across Maine a hallmark of my tenure in public office. 

I have often said, I do not need a survey to understand what is 

going on on Main Streets and what is happening that they do not 

like in Washington. And the fact is, I always could understand it 

almost immediately when I was on Main Street doing those small 

business tours because I would hear exactly what was going on in 

a particular community. 

That is why, along with Senator Landrieu, we urged the President to restore the SBA Administrator to cabinet level status, 

where it rightfully belongs, and we are fortunate in our State of 

Maine to have Maine’s own Karen Mills now having a seat at the 

President’s cabinet table because America’s prime job generator 

should have a voice at the highest levels of decision making. I was 

pleased to recommend Administrator Mills to head the SBA, where 

she has proven to be a superlative leader for small businesses within the administration. And I hope in the months ahead, the President will continue to rely on her wide ranging expertise and knowledge, hands-on knowledge, on how to create jobs, because they are 

desperately needed, as we all well know. 

In speaking of Maine, the small businesses in my home State 

have another staunch advocate who is here today, the Maine Director of the National Federation of Independent Businesses, David 

Clough, who has been a longstanding friend, as well. I think David 

has been head of the NFIB as long as I have been in the United 

States Congress—almost. I have had the immense privilege to 

serve with David over the years and I want to thank him most especially not only for testifying here today on the second panel, but 

also for his longstanding dedication and devotion to small businesses across the State of Maine. 

I also want to express my appreciation to the other panelists that 

will be on both the first and second panel, and most especially Ms. 

Julie Weeks, with whom I have worked for the last 20 years on 
9 

issues that are important to women-owned businesses. So I want 

to thank her, as well, for being here. 

As these witnesses can all attest, small businesses are the embodiment of the American dream, and indisputably the fight for 

their well-being is integral to the future success of our nation. 

Small businesses consistently identify access to affordable capital 

among their top priorities, and this committee has worked unceasingly to increase SBA lending. The provisions Chair Landrieu and 

I championed in response to the credit card system in both 2008 

and 2009 were recognized as increasing SBA lending across the 

country 90 percent, and in my own State of Maine, 236 percent. 

And the Small Business Innovation Research program, the Women’s Business Center program, HUBZone program, the women’s 

contracting program, are advancements that remain some of my 

signature accomplishments in this Congress in working with the 

Chair of this committee and the members of this committee. 

Finally in all of the initiatives I have undertaken as a legislator 

and as an advocate is the remarkable work of my staff, without 

whom I could not have possibly done the job on so many of these 

issues over the years. They have moved heaven and earth on a 

daily basis to make things happen for small businesses because 

they truly care about America’s entrepreneurs as much as I do, and 

they are truly the best. 

So I want to thank them, behind me, which is where they have 

always been, my Staff Director, Wally Hsueh, my Deputy Staff Director, Matt Walker, Meredith West, Adam Reece, Scott McCandless, Shelley New, James Gelfand, Tara Crumb, Jake Triolo, and 

Con Efstathiou. I want to thank each and every one of them from 

the bottom of my heart for all they do—— 

[Applause.] 

And also, I want to thank the Chair’s staff, as well, Don Cravins, 

the Staff Director, who has been great to work with over the years, 

and Brian Van Hook and Robert Sawicki. We thank you very much 

for all the work that you have done to make it work here on the 

committee. 

And finally, I would just say, I know there are a number of 

issues that are going to be important going forward and I will not 

restate them here today. Suffice it to say that, obviously, in order 

to seek the accomplishments that are so important to small businesses, whether it is a regulatory reform, a tax reform, opening the 

doors for entrepreneurs that we are going to hear about today, 

what will make the most effective approaches to eliminating those 

barriers to entrepreneurship, and also to meeting the statutory 

goals under the contracting program within the Federal Government. There are so many issues out there that can make a profound difference for the health and well-being of small businesses. 

But none of these goals can be accomplished without compromise 

and without bipartisanship. And I truly have been gratified in serving on this committee to have been blessed with the ability to work 

across the political aisle with the leadership of the Chair. That has 

been the signature, frankly, of this committee. It has been a bipartisan committee from start to finish and I have truly appreciated 

that, because public service has to be about problem solving and 

that is what this committee has been all about. 
10 

So I wish you all well in the future. I know you will continue to 

do extraordinary work on behalf of those that are going to be so 

instrumental for our nation’s recovery. 

So, Madam Chair, thank you for this opportunity and thank you 

for the ability to work with you over the years, and to all the committee members, on these key issues that all of us care so much 

about. 

Chair LANDRIEU. Thank you, Senator Snowe, for that eloquent 

opening statement. And again, we will miss you, your voice on this 

committee. But I am sure that you will land somewhere where we 

can continue to hear that loud megaphone. 

Senator Moran wanted to make a brief opening statement, and 

I would ask the other members if you would like to say a word or 

two, we will go right into our comments. 

OPENING STATEMENT OF HON. JERRY MORAN, A U.S. 

SENATOR FROM KANSAS 

Senator MORAN. Madam Chairman, thank you for that courtesy. 

Several of us on this committee, including Senator Rubio, asked 

that we have a hearing on entrepreneurship. Thank you very much 

for agreeing to that. I know this is something that you care a great 

deal about. You have introduced legislation dealing with entrepreneurs and start-ups. 

We are actively engaged in an attempt to recognize the role that 

entrepreneurs and start-up companies play in our economy. History 

shows this is where jobs are created. Unfortunately, the statistics 

now show that that is declining. Start-ups in the United States are 

less. The number of jobs they create are fewer. In a global survey, 

the United States is no longer in the top two or three countries in 

the world in which we are rated to be the place to start a business. 

Those things are very disturbing. As we want to work to grow the 

economy, which really means put Americans to work, it is entrepreneurs and start-ups that deserve significant attention. 

In a bipartisan way, as the Senator from Maine suggested is the 

only way to get anything done around here, Senator Rubio and I, 

along with Senator Warner from Virginia and Senator Coons from 

Delaware, have introduced legislation, Start-Up Act 2.0, that we 

will continue to pursue in a serious effort to address these issues. 

It comes about from academic research done by the Kaufman Foundation with policy recommendations dealing with taxes and regulations, with Federal research and how to commercialize that research, and perhaps most importantly, the issue of the global battle 

for talent—our ability to attract and retain individuals who have 

educated themselves in ways that are so advantageous to our economy, as well as individuals who have entrepreneurial skills and desires who happen to be foreign born but have the ability to create 

jobs in the United States. 

And so in this brief moment of an opening statement, we look 

forward to working with you and our colleagues across the Senate 

to make certain that we do the things necessary to grow the economy and put Americans to work. And there is something special 

about small business, about entrepreneurs, that makes America 

what it is. And it is that sense of independence and the ability to 

survive and struggle and succeed, and we want to be helpful to you 
11 

and to our colleagues to see that those goals are met and the American Dream is lived. 

Thank you very much. 

Chair LANDRIEU. Thank you very much, Senator. I really appreciate you and Senator Rubio joining us in a longstanding effort to 

highlight the importance of entrepreneurship in our country. In the 

last two years, we have had a half-dozen roundtables where this 

room has been packed with experts from the Kaufman Foundation 

that have testified before our committee. I mean, I can recall at 

least two times, if not three, just recently, about some of the principles that you have outlined, and we have had some of the leading 

experts from universities and think tanks, from a broad variety. 

We have had some of our extraordinary partners from the banking 

community, from the regulatory. So we really appreciate your willingness to join that effort. 

Secondly, the bill, which we have reviewed, as you know—unfortunately, our committee doesn’t have jurisdiction over the majority 

of the issues in that bill. However, our committee can continue to 

be a platform to talk about some of the significant pieces in that 

bill, which I personally, as you know, support. So any opportunity 

we have to be able to talk about some of those, but immigration 

is under Judiciary. Your finance issues are under the Finance Committee. And so the things that relate to the Small Business Administration will be under the jurisdiction of this committee. But we 

really appreciate your championing that. 

Anybody else? Senator Shaheen and then Senator Rubio and 

then we will get right into our testimony. 

Senator SHAHEEN. I am not going to make an opening statement, 

but I just want to recognize some New Hampshire folks who are 

here: Scott Gardiner, who is from the Granite State Development 

Corporation who is going to be testifying on our second panel, and 

with him are William Donoghan [phonetic], who is a New Hampshire businessman and he has taken advantage of some of the lending programs through the SBA, and David Schwartz [phonetic], 

who has probably been working on the 504 refinancing programs 

longer than anybody I know of in New Hampshire. We are delighted that all of you are able to join us today. Thanks. 

Chair LANDRIEU. Senator Rubio. 

Senator RUBIO. Just briefly. Actually, just a comment to the 

Chair on a comment that you made. I am new here, so I know how 

much—but I have already picked up on how jealous committees are 

about their jurisdiction. I would just say, and I do not know what 

we can do about it as you went through the different scenarios, we 

will hear a lot of testimony today about all kinds of things that affect small businesses, but we cannot do anything about it in here, 

and these other committees are considering it in the vacuum of a 

legal issue or a big company issue, and yet these are critical to 

what we are trying to accomplish. 

So I know jurisdictions are a hard thing to change around here, 

but I just hope there is more of a role for us to play in this committee. This is the logical place for—— 

Chair LANDRIEU. Yes. Do not take what I said as this committee 

does not have influence. We have been a major influence, not only 

passing legislation, but influencing the outcome of some serious 
12 

legislation. But we do not write the tax code in this committee. We 

do not oversee the immigration laws in this committee. So we have 

to do that in conjunction with the Chairs and Ranking Members of 

the other committees, which we have done on many occasions 

through either legislation or by letters that we all sign together, 

sending them to the committees saying, your bill will not get very 

far unless you include X, Y, and Z. So this committee remains, I 

think, the largest, strongest voice for small business on the Hill 

and thank you. We are going to continue to do that. 

Senator RUBIO. I guess I just was expressing the view that if 

they just let us handle all—— 

Chair LANDRIEU. Well—— 

Senator RUBIO [continuing]. It might get taken care of before 

they would. 

Chair LANDRIEU. Why do you not bring that up with your leadership and see what they think about that? 

[Laughter.] 

I will let you try it with your leadership first, and then I will go 

talk to Harry Reid. 

[Laughter.] 

But anyway, let me introduce our panel this morning, and they 

are going to limit their opening statements to five minutes because 

we do have four very active members here and they want to ask 

you questions about what we are doing today, what is working and 

not working. 

First, Sean Greene is the Associate Administrator for Investment 

and Special Advisor for Innovation at the SBA. In his role, he is 

responsible for both the Small Business Investment Company, 

SBIC, program, as well as the Innovation Research program. He 

also leads the SBA’s efforts on promoting high-growth entrepreneurship, particularly as part of the President’s Start-Up America 

Initiative. 

We have Michael Chodos, Associate Administrator for the Office 

of Entrepreneurial Development. He is responsible for overseeing 

the agency’s counseling, mentoring, and training programs, which, 

as you know, I think, is extremely important and does that with 

partners all over the country. 

So, again, we are focused on start-ups. We are focused on gazelles and fast-growing companies. But I want to say, also, Senator 

Moran, that I am very focused on lifestyle businesses and family 

businesses that do not want to be the next Microsoft, but they just 

want to feed their family, contribute to their community, and they 

have a right to be heard, as well. So it is a combination of promoting the fast-growth potential start-ups and also the lifestyle 

businesses, which many people, of course, in your State and my 

State, choose to be entrepreneurs as a lifestyle, and I think we 

need to honor that, as well. So that is what we are doing, trying 

to find that balance. 

So, I do not know, Mr. Greene, do you want to start, please. 
13 

STATEMENT OF SEAN GREENE, ASSOCIATE ADMINISTRATOR 

FOR INVESTMENT AND SENIOR ADVISOR FOR INNOVATION 

POLICY, U.S. SMALL BUSINESS ADMINISTRATION 

Mr. GREENE. Sure. Chair Landrieu, Ranking Member Snowe, 

members of the committee, I am pleased to testify before you today 

and I want to thank you for calling this hearing and for your 

strong support of not only SBA, but promoting more effective and 

creative new ways to serve entrepreneurs all around the country. 

So one of my primary focuses at SBA is on high-growth entrepreneurship, and as you know, high-growth small businesses create 

the vast majority of net new jobs in our economy. But we also know 

that they have different needs, and to address those needs, the administration launched the Start-Up America Initiative, a major initiative focusing on what we can do to help how we serve highgrowth companies and entrepreneurship. 

Now, one of the first things that we did within Start-Up America 

was to get out and say, we have to listen to our customers. And 

so we traveled the country. We talked to over 1,000 entrepreneurs, 

investors, and other stakeholders in the entrepreneurial ecosystem. 

And what we heard was these companies that are facing significant 

challenges, ranging from access to capital to securing the right 

human capital to support their companies. And there are many opportunities for the public and private sectors to work together to 

address those challenges. 

Based on the feedback that we heard, we have acted. And one 

of the primary focuses has been improving our core programs to 

support high-growth entrepreneurship, and at the heart of those 

improvements is focusing on ways that we can streamline, simplify, 

and strengthen those core programs. 

One of the programs in which we have made great strides and 

where legislative changes that this committee is both supporting 

and sponsoring will allow us to do even more is with the Small 

Business Investment Company program, the SBIC program. As 

many here today know, the SBICs are part of a unique program 

at SBA to put long-term patient investment capital into America’s 

small businesses, allowing them to grow and to create jobs. Today, 

the SBIC program serves as a model for successful public-private 

partnerships, and the program, which has been around since 1958, 

is completely market-driven. We do not make the investment decisions. The private investment fund managers do. 

Today, the program is more than 300 SBA licensed funds which 

invest in a wide variety of small businesses, such as JSI Store Fixtures in Milo, Maine, which after receiving an investment from an 

SBIC more than doubled the number of employees, from 80 to 200. 

The company was just recognized by the Small Business Investor 

Alliance as the SBIC Portfolio Company of the Year. 

In fiscal year 2012, I am proud to report we have had the third 

consecutive record-breaking year for the program. And so for our 

venture program, we have reached all-time highs in the 50-plus 

years of the venture program in terms of how many funds we license, the amount of private capital we attracted to the program, 

SBA commitments of leverage into these funds, and most importantly, how many investment financings go out to small businesses 

themselves. Importantly, in executing that, we took the average 
14 

time for a new fund to come into the program from an average of 

15 months to just over five months, and that streamlining was a 

critical part of the success they were able to accomplish. 

Now, we believe that two legislative changes that are before the 

committee and have been embedded into the SUCCESS Act, the 

RESTART Act, and other initiatives can help us do even more to 

help those high-growth small businesses. The first change is an increase in the annual authorization for the program from $3 billion 

to $4 billion. We have not hit that limit now, but if you look at the 

growth trajectory that we are on, we are likely to hit that soon, and 

getting ahead of that growth trajectory, we think is important. 

And then, secondly, is a change in the family of funds limit from 

$225 million to $350 million. What we see right now is some of our 

most successful funds in the program are hitting that cap, and we 

believe by changing that cap, it creates a great way to continue to 

grow the program while at the same time doing it at very little risk 

to taxpayers. Critically importantly, this program runs at zero subsidy and we want to continue that growth while maintaining its 

zero subsidy status. 

Now, another set of programs that is critical is the SBIR and 

STTR program, and we would like to thank the committee for its 

efforts to reauthorize the program. Since the reauthorization at the 

end of last year, we have been incredibly busy with the rulemaking. We are close to finishing that rulemaking. I am also 

pleased to say that we have put into effect two new policy directives for SBIR and STTR. In the prior reauthorization, it took two 

years to get the new policy directives in place. This time around, 

we have done it in seven months. So we feel good about the program, but there is still a lot more work to do in implementing the 

reauthorization at the participating agencies, but we are staying on 

top of it and we are committed to working with you and keeping 

you informed of our progress. 

In addition to these two programs, though, SBA—— 

Chair LANDRIEU. In one minute, if you would. 

Mr. GREENE [continuing]. Looks to continue its role as advocate 

for small business and entrepreneurs across the Federal Government. The administration has instituted a Presidential Innovation 

Fellows Program to bring entrepreneurs from the private sector 

into the government to help develop—to address key problems with 

more innovative solutions. And I know the committee is looking at 

legislation to address similar kinds of issues. 

We have also been working with other agency partners on everything, on ideas around immigration, to supporting accelerators and 

mentorship programs all around the country. So that advocacy role, 

working with agency partners, are critically important, as well. 

And so in conclusion, Chair Landrieu, I once shared with you my 

favorite definition of entrepreneur, which is someone who does 

more than anyone thought possible with less than what everyone 

thought necessary. And so as a former entrepreneur in the private 

sector, it is this entrepreneurial spirit that we are bringing to SBA, 

to generate more entrepreneurial approaches and to continue to do 

more than anyone thinks possible in service of our nation’s entrepreneurs. 
15 

So we look forward to working with you to implement those kind 

of actions and thank you for taking the time and I look forward to 

questions. 

[The prepared statement of Mr. Greene follows:] 
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Chair LANDRIEU. Thank you, Sean. Your leadership has really 

been visible and you have made a market change and we really appreciate that. 

Mr. Chodos. 

STATEMENT OF MICHAEL CHODOS, ASSOCIATE ADMINISTRATOR FOR ENTREPRENEURIAL DEVELOPMENT, U.S. 

SMALL BUSINESS ADMINISTRATION 

Mr. CHODOS. Chair Landrieu, Ranking Member Snowe, and 

members of the committee, thank you for the opportunity to testify 

here today before the committee. 

Before I start, I know that both Sean and I would like to say how 

much Administrator Mills would like to echo all of the comments 

that were made here this morning about the long and tireless and 

extremely important service and to express gratitude for all the 

service that Ranking Member Snowe has provided over these many 

years in this committee and on behalf of small business. So thank 

you on Administrator Mills’s behalf as we start today. 

We at the SBA, of course, generally support your strong support 

of the agency, as well as your continued leadership on all the 

issues impacting America’s small businesses. 

SBA’s entrepreneurial development programs, of which I am in 

charge, and all of our partners, are deeply embedded in local and 

regional economic development ecosystems across America. We 

support over one million clients annually as they start and grow 

their small businesses. We have more than 14,000 business counselors, mentors, and trainers available through over 1,000 Small 

Business Development Centers, 106 Women’s Business Centers, 

and over 350 SCORE chapters. Since 2009, we have also provided 

intensive entrepreneurship training to over 1,300 small businesses 

in 27 cities across America through our groundbreaking e200/ 

Emerging Leaders Program. This past year alone, the clients we 

assisted started almost 16,000 new businesses and accessed over $4 

billion in new capital. 

But we and our partners do not just support innovation. We 

practice it. That is why for this past year we have made collaboration and coordination a key goal and objective across all our resource partner and cluster networks. In addition, in direct coordination with our resource partners, we are working on better ways 

to measure and report out comparative performance metrics across 

the entire network. We believe that transparency leads to ongoing 

self-reflection, innovation, and improvement, and we look forward 

to great progress on this front in the coming year. 

In addition to in-person training and counseling, the SBA continues to expand its online engagement with small business. Since 

2009, more than 2.5 million people have accessed the courses, assessments, and tools available on SBA.gov on topics as diverse as 

business planning, market and competitive analysis, use of social 

media, and navigating the Federal contracting landscape. 

One of SBA’s top priorities is making sure tools are in place for 

helping small businesses receive Federal contracts. We strongly 

support permanently increasing the size of the SBA surety bond 

guarantee from $2 million to $5 million, as has been called for by 

this committee in various pieces of legislation. 
22 

Another important change which is part of the SUCCESS Act 

and the RESTART Act is the women-owned contracting provision, 

which would remove caps on contract awards under the WomenOwned Small Business Program. We believe this will allow more 

Federal contracts to flow to women-owned small businesses. 

Over the past four years, SBA has developed new partnerships 

and programs that expand the agency’s reach to more small business owners in more communities across the country. For example, 

we know that veterans over-index in entrepreneurship. So, working 

with the Departments of Defense, Veterans Affairs, and Labor, we 

recently launched Boots to Business in pilot locations at selected 

military facilities across the country. When fully rolled out, Boots 

to Business will provide an introduction to the opportunities and 

realities of small business ownership and entrepreneurship as an 

optional track for the 250,000 service members transitioning each 

year through TAP. 

In addition, we are working with AARP to train and counsel 

more than 100,000 encore entrepreneurs this coming year on opportunities to use their experience and skills to start and grow 

businesses. We are also working with the Department of Labor to 

pilot Start Young, an entrepreneurship training program for young 

people at 13 Job Corps sites across the country. And we have engaged with Historically Black Colleges and Universities and other 

minority-serving institutions to help traditionally underserved 

young entrepreneurs access life-long entrepreneurship training and 

support in our network. 

Increasing small business exports is a major focus of the SBA, 

and thanks to the exporting provisions of the Small Business Jobs 

Act of 2010, the agency has had new resources and tools to put towards this priority. We are working with agencies across the administration to build on our recent successes in this area and look 

forward to continuing to work with the committee on these efforts. 

Finally, our Regional Innovation Clusters drive economic growth 

by connecting small business innovators with targeted technical 

support in our network as well as investment and funding partners 

in procurement and supply chain opportunities. 

I have reviewed the SUCCESS Act, the TEAM UP Act, the RESTART Act, and the other pieces of legislation that are before this 

committee. We share a common commitment to providing small 

businesses with the tools they need to start, grow, and create jobs. 

Our resource partner and clusters network has an extraordinarily 

diverse range of experts in every part of the small business ecosystem and we look forward to working together in order to support 

them. 

Of course, I am happy to answer any questions. 

[The prepared statement of Mr. Chodos follows:] 
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Chair LANDRIEU. Thank you very much. 

Senator Risch has joined us. Welcome, Senator, and thank you 

for your active support of the work of this committee. 

Let me begin by asking both of you this question, and we will 

do a five-minute round. We realize that government cannot do it 

all, and I have been a very big supporter of partnerships with nonprofits and the private sector to accomplish goals. Can you both 

take 30 seconds or 45 seconds and be very specific about how this 

small agency, which is only $1 billion—I mean, it is dwarfed by 

Education, Health, Defense, Commerce, et cetera—how you are 

leveraging partnerships either with banks, governments, nonprofits, et cetera, and why you think that is so important, and how 

successful are we in leveraging the power of others, because we obviously are not a big enough agency to do this all alone. 

Let me start with you, Mr. Greene. 

Mr. GREENE. Sure, and let me talk about that on the capital side 

and then on the broader side. On the capital side, again, I think 

the SBIC program is the embodiment of a smart—— 

Chair LANDRIEU. Speak closer into your microphone, if you 

would. 

Mr. GREENE. I am sorry. The SBIC program is the embodiment 

of a smart public-private partnership in which we say we are not 

going to make the investment decisions. Let us let investment professionals do that. The incentive, the economic incentives are 

aligned to do that. And we have had a significant focus on not only 

attracting more high-quality fund managers into the program, but 

reaching out to the investors who invest in those funds and increasing transparency and information about the program to make 

them want to come to the program, as well. So on the capital side, 

that is critically important. 

But it is also critically important on the broader side, as well. So 

one of the primary focuses that we have had on supporting 

mentorship, et cetera, is in and around something that we call accelerators, and these are organizations that come in many shapes 

and sizes that are all over the country, and they are doing great 

work, not only to help more companies start, but to accelerate the 

growth of those companies. 

And as one example, I would point to people like Idea Village in 

Louisiana, who are not just helping companies one at a time, but 

are doing great work to say, how do we strengthen the entrepreneurial ecosystem in Louisiana? And there are examples of that literally in every State of the country. 

And so what we have to be doing is saying, how can we help accelerate these accelerators? And we are looking at a range of different things to do that. We feel good about the progress, but there 

is much more work to do. 

Chair LANDRIEU. Thank you. 

Mr. Chodos. 

Mr. CHODOS. Chair Landrieu, thank you for the question. I think 

there are two things that we would like to focus on as part of the 

ways in which the agency leverages taxpayer dollars in order to engage and support with small business. 

First and foremost, all of our key, core grant partnerships with 

our SCORE network, with our Small Business Development Cen-
28 

ters, and with our Women’s Business Centers involve match requirements that create at the very foundation a partnership between the Federal Government, research institutions, and local resources, including foundations and local contributors, in order to 

make a connected-based approach to supporting small business. 

But in addition, we work with partners in all of our outreach and 

mentoring activities. I mentioned our recent partnership with 

AARP in order to support encore entrepreneurs all over the country. Our cluster networks all across the country act as convening 

and networking entities to bring together small business 

innovators with local commercial and supply chain opportunities, 

along with the local investment community, as well as large defense contractors or other prime contractors in order to knit together the different pieces of the economic community. 

We believe economic development and small business support is 

a ground game. It requires us to work one business at a time with 

all of the pieces they need to succeed. That is what we do and what 

we build into the program right from the very—— 

Chair LANDRIEU. Thank you very much. 

Let me ask you about the 504 program, because this is a very 

important program that has expired. There are literally seven 

pieces of legislation, at least, that have the extension of this 504 

provision. In 2011, through this program, we leveraged $4.8 billion 

in capital. In 2012, it was $6.7 billion. What are the consequences, 

in your mind, Mr. Greene, of not extending the benefits of this program? I mean, what will happen to the commercial refinancing, I 

guess, sector in this country for small business? 

Mr. GREENE. So, Senator Landrieu, we agreed this was a critically important program. In 2012, we get $2.2 billion for the 504 

refi. Over 2,700 small businesses benefitted from this. So we know 

there is strong demand from small businesses as well as from 

CECs as intermediaries looking for this product. 

So the administration is taking a hard look to evaluate whether 

to support this specific proposal. Critically important will be maintaining the zero subsidy nature of the program and making it—continuing to make it an attractive vehicle, both for the small businesses and the lenders. Of course, if Congress decides to reauthorize, we will be there to make sure that we efficiently and effectively 

implement the changes that you legislate. 

Chair LANDRIEU. Okay, and I want to underscore this. It is a little point of contention. I realize that it would be ideal to run every 

program at absolutely no cost to the government. I mean, that 

would be ideal if we could figure out ways and we continue to press 

that agenda. But a modest subsidy or a planned-for moderate subsidy is still quite valuable if it is leveraging billions of dollars that 

are otherwise completely unavailable to small businesses in the 

conventional lending that is either going on or not going on in this 

country. 

So while philosophically people argue for zero-subsidy programs, 

I urge our committee members to be open to weigh the benefits of 

the subsidy that is being provided for the benefit that is occurring. 

And, obviously, it needs to be a large net benefit. 

Senator Snowe. 
29 

Senator SNOWE. Thank you, and I want to thank both of you 

today for the contributions you are making to these vital programs 

because I think start-ups, obviously, are crucial to generating economic growth in this country and we are reliant on those starting 

new firms. 

What do you think, when entrepreneurs are thinking about starting a new firm, what are the issues that are the most significant 

in making those decisions, in your estimation? 

Mr. CHODOS. Thank you, Senator Snowe. I speak to small businesses all the time and they talk a lot about the things that they 

are concerned about when they start their businesses. I think, first 

and foremost, every small business wants to know where are they 

going to get the money to pay for the first few months of payroll, 

the first set of equipment and machinery, and the first set of inventory or raw materials. So access to capital in the early stages of the 

business is always top of mind. 

But I also speak to small businesses all the time who come into 

business with a particular area of expertise. For example, they 

know manufacturing. They are a mechanic. They know how to do 

something in terms of marketing or consulting or that sort of thing. 

But they need help learning about the other parts of business with 

which they are not familiar. They do not know how to read a financial statement. They do not know how to put together a balance 

sheet. 

What I find is that businesses say, we need the kind of help that 

we need to answer the questions we do not yet know how to answer 

and we want it to be available in our communities or available online so that it is straightforward and accessible. That is what I 

hear regularly. 

Senator SNOWE. And do you find that the existing programs— 

and I think that what the Chair is discussing about sort of formalizing a mentorship program, because I think that is crucial— 

would be beneficial at the very outset? 

Mr. CHODOS. Yes. Let me say this—oh, I am sorry. 

Senator SNOWE. No, go ahead. 

Mr. CHODOS. Yes. We find that our mentors act—really, at the 

end of the day, there are those questions that small businesses 

know that they have when they start, and almost as important are 

all the things they do not yet know they do not know about what 

they need to learn in order to start and grow their businesses. Having a mentor, whether it is in a high-growth business or whether 

it is in a Main Street business, is critical to not making the mistakes that somebody else has already made so that you can actually deploy your resources to creating that next job or getting that 

next product out the door. We find that mentorship, once accessed 

by a small business, becomes a critical pillar of their success. 

Senator SNOWE. And given the current uncertainty with respect 

to both taxes and regulations and the overall environment and 

what is going to happen regarding the fiscal cliff and going forward, to what degree is that suppressing entrepreneurship at this 

point? 

Mr. CHODOS. Well, Administrator Mills and the President met 

with small businesses just a couple of days ago at the White House 

and heard, I think, one message again and again and again, that 
30 

small businesses want certainty, they want to know what the situation is going to be, they want to make sure that their customers 

are going to have money to spend on their products and services, 

and they want to have resolution. 

Senator SNOWE. Do you think it is possible to draw a line, the cutoff on $250,000? I know it is much debated, in terms of what 

effects it has on small businesses, where we could draw that line, 

whether it is on an income tax return and deducting small business 

income, because, as you know, the preponderance of small businesses file individual tax returns, or through a dollar figure. But 

I do think that that happens to be a major issue that we have to 

address, as well, to make sure that we do not create unintended 

consequences. 

Mr. CHODOS. Well, I do know that the level at which any particular terms of a deal might be reached are under very, very focused discussion at the moment, and I do know that the small businesses with whom we speak simply say that, at this point, what 

they are most interested in is the spirit of compromise and of problem solving and of resolution that has really been the hallmark of 

this committee and that is so important in order for them to work 

well with their customers and to plan for the future. 

Senator SNOWE. One of the programs, and the President, I think, 

referred to it last year in his State of the Union Address, was the 

Early Stage Innovation Fund under the SBIC. Exactly where does 

that stand today and how effective has that been, because I do 

think it is a great approach in helping early-stage companies to get 

established. 

Mr. GREENE. So we launched this program last year. When we 

saw the data—not only do we hear from small business about the 

difficulty of raising early patient capital, but the numbers spoke for 

themselves, where venture capital as a whole has decreased significantly, particularly at the early stages, and there was a massive 

unequal distribution of where that capital goes so that 70 percent 

of early-stage financings only happened in three States. On the 

other hand, all the data shows that there are companies with highgrowth potential all across the country, not just located in those 

three States. 

So we need to make some regulatory changes within the SBIC 

program to launch that. We executed that last year. We identified 

a process by which the funds would apply. We had over 30 funds 

applying and we gave green light letters to six funds who are now 

completing their private capital raised and will come back to us. 

So we are off to a good start. We expect to license about four to 

five funds per year over a five-year period. So we are off to a good 

start. 

Senator SNOWE. Thank you. 

Chair LANDRIEU. Thank you. 

Senator Shaheen. 

Senator SHAHEEN. Thank you. Thank you both for your testimony and for being here today and for all the work that the SBA 

is doing. Ninety-five percent of New Hampshire workers work for 

what the SBA technically calls a small business. So, obviously, 

your work and the importance of small businesses are significant 

in New Hampshire. 
31 

One of the things that I did was to ask some of the folks in New 

Hampshire who work with small businesses what questions they 

would like to see asked at the hearing today, and this one comes 

from someone who has an incubator, but I would think she could 

also be described as an accelerator, as well. And she points out that 

one of the components of the SUCCESS Act is a provision to require SBA to coordinate and make consistent data collection and 

outcome metrics for entrepreneurial development. She is concerned 

that the metrics change from year to year, which makes sense, but 

how are the metrics formulated and are they truly given a chance 

to work before they change? Are we picking the right metrics? And 

then are we putting the resources behind them and really giving 

them a chance to work before we make changes in them? And I do 

not know which one of you would like to answer that. 

Mr. CHODOS. Perhaps I can, Senator. In our department, in the 

Office of Entrepreneurial Development, we maintain the core database and surveying systems for all of our entrepreneurial activities 

across the country. So we have our EDMIS system, which is essentially the Entrepreneurial Development, Management, and Information System, as well as an ongoing annual survey of the recipients of the counseling services across our network in order to identify the outputs from our program, the demographics of those who 

access our program, and, essentially, the outcomes they achieve by 

virtue of having access to our program. 

I will say that the question of making sure that we measure the 

right things, that we measure them consistently, and that we report out promptly and effectively is—it has always been our goal, 

but it is an opportunity, I think, constantly, for improvement. We 

are very focused in the Office of Entrepreneurial Development and 

across the agency at having a performance metrics analysis framework in our core programs, the WBCs, the SBDCs, and SCORE, as 

well as in our cluster network, and as well across our other programs, which is consistent and which actually measures those 

things that the agency, that Congress, and that our stakeholders 

care most about. 

So we have implemented this year two things. First of all, we 

have listened to our resource partners. We have listened to stakeholders across the country. And we are currently engaged in an upgrade of the EDMIS system in order to make it more effective, 

more reliable, and more accessible for those who use it, and we are 

talking to all of our resource partners to find out what is the right 

way in order to collate and actually align all of the different measures we use, because everybody here knows that different people 

come to Congress on a regular basis, and to us, and say, I have my 

set of metrics, and somebody else has their set of metrics, and you 

never really get a sense of how they all compare to each other. 

We think it is critically important—it is both an obligation and 

it is an opportunity—to be able to actually compare and cross-correlate and actually coordinate and align everybody’s metrics, so we 

ask the same questions and find out how we are all doing compared to each other and against those goals we think are most important. 

Senator SHAHEEN. Thank you. 
32 

Mr. Greene, you talked about the work to streamline programs 

and make them more effective. One of the provisions in the SUCCESS Act improves small business access by reducing paperwork 

and red tape. And again, this is a question from New Hampshire. 

The concern is that we should reduce paperwork for all kinds of 

small business contracting opportunities, grants, et cetera, and 

simplify the process based on the size of the grant or the award so 

that we are not asking for the same amount of paperwork for something that is going to offer $20,000 versus something that is going 

to offer $200,000. So can you talk about what the effort is there to 

look at that difference and see how to address that? 

Mr. GREENE. Absolutely. So, first of all, on the streamlining, I 

think it is critically important, back to the measurement point, 

that we measure and so that we look at turn-around times, et 

cetera. 

Secondly, it is important that we be transparent and we publish 

the information about how we perform so that everyone can know, 

both to hold ourselves accountable and also so that small businesses can have predictability when they know that they are interacting with us. 

Now, more specifically on the issue of one size does not fit all, 

you know, that is a critical component that we are looking in many, 

many different areas. But one specific place that we are looking at 

this is on the contracting side. So I mentioned earlier a Presidential Innovation Fellows effort to bring entrepreneurs into the 

Federal Government to tackle tough problems. This is a tough 

problem, to say, how do you customize. 

And so a specific project that SBA is leading is an effort we are 

calling RFP–EZ, and the notion is just like 1040–EZ, is a simpler 

form for taxes—— 

Senator SHAHEEN. Terrific. Love it. 

Mr. GREENE. Let us do the same thing for government contracting. And we are starting small. We are going to do it as a 

pilot. We are going to focus on information technology, where costs 

have come down by 10X in the private sector but not necessarily 

on the government side. But by reducing the transaction costs of 

doing business with the government, we think that we can bring 

more innovative technology companies into Federal procurement, 

lower costs for taxpayers, and, by the way, get more dollars to the 

companies who create jobs, not just on their balance sheet, but on 

their P&L. 

Senator SHAHEEN. Well, I hope, Madam Chair, that we can 

maybe get more—— 

Chair LANDRIEU. Detail. 

Senator SHAHEEN [continuing]. Detail, yes, expansion on this 

proposal for the committee. Thank you. 

Chair LANDRIEU. Well, thank you. We will. And Senator 

Shaheen, you have been a real advocate for efficiency, streamlining, transparency, and let us continue to work on it. But that is 

very good, promising news for that launch of that pilot. 

Senator Moran. 

Senator MORAN. Madam Chair, thank you. 

I appreciate your testimony. It has generally been focused on 

SBA programs and I appreciate their value. I want to take the 
33 

soapbox opportunity that we have described for our committee and 

for the SBA to advocate on behalf of businesses, entrepreneurs, 

start-ups, and indicate, first of all, I think there are, as I indicated 

briefly in my opening comments, there are some troubling trends 

in regard to start-ups and entrepreneurship in the United States. 

Our economy obviously has slowed down. There are fewer entrepreneurs starting businesses. And those new businesses are hiring 

fewer workers. 

The number of new businesses started in the United States has 

declined every year since 2006. In 2010, there were approximately 

394,000 new businesses started in our country, and we are glad for 

that, but that is the lowest number of start-up businesses per year 

since 1977. These new businesses created more than 2.3 million 

jobs in 2010, but that is the third fewest number of jobs created 

by new businesses in more than 30 years. 

Secondly, there are external indicators showing that the United 

States is becoming less friendly to entrepreneurs. The World Bank 

has an annual report called ‘‘Doing Business.’’ It ranked the United 

States as the fourth easiest place in the world to start a business 

in 2007, but four years later, we dropped to 13th in that measure 

and we remained there again this year. 

Since starting on this—paying attention to this entrepreneurial 

start-up issue, one of the things that stands out to me—I have only 

been a member of the United States Senate for a little less than 

two years now, but in that two years, seven other countries have 

adopted legislation, things that we have not done, pursuing entrepreneurial start-up policies that create greater opportunities in 

those countries. 

Chile stands out as an example of where they are doing many 

things to increase the opportunities for businesses to start up in 

their country. They have an initiative called Start-Up Chile that 

provides entrepreneurs with capital to develop their business, free 

office space, and temporary visas. These incentives are attracting 

entrepreneurs from around the world to Chile, including from the 

United States, and that is the part I wanted to emphasize. And, 

in fact, 20 percent of the grant recipients, or the recipients of those 

incentives, came from the United States. So one-fifth of the businesses that received those incentives were U.S. businesses. 

There is this global battle for start-ups, for entrepreneurship, 

and we are falling behind. The United States is falling behind. And 

if we lose entrepreneurs, we lose the jobs they create. 

I remember being in California talking to a business who was 

waiting on the decision on an H–1B visa for 68 potential new employees at their company. They did not make it in the competition. 

At the appropriate time, they were unable to get the visas. So the 

story to me was, we hired those folks anyway, but we hired them 

in Canada. And so 68 jobs lost because we have a visa program 

that did not work, does not work. And while 68 jobs is a significant 

loss, what troubles me even more is my guess is that some of those 

68 people hired in Canada will start the next entrepreneurial business that may result in significant job creation that could have 

been in the United States but will now occur in another country. 

And so I want to use the megaphone of the committee and of the 

SBA to highlight the immediacy, the need to act more quickly than 
34 

this Congress and this administration are doing. We have a lot to 

lose, and we are going to work our way through legislative proposals, but we also ought to recognize that we do not have much 

time, that every day, every week, every year that goes by, others 

are moving in a direction that we are not. 

Of the provisions in Start-Up Act 2.0, some deal with the regulatory environment, some deal with the tax code, as I said, some 

deal with the ability to take Federal dollars used in research and 

more rapidly commercialize that research. The most contentious or 

controversial deals with visas for STEM, foreign-born, U.S.-educated individuals with talents and intellect that we, in my view, 

desperately need. It deals with entrepreneurs staying in the United 

States. 

And I know that the House today is taking up a STEM jobs bill. 

The President yesterday at the White House indicated that that 

bill, they supported, but would not sign the bill because it is not 

all-encompassing. 

I just want to highlight that we do not have—if Congress’s history is any indication of how long it takes to get immigration completed in a comprehensive form, we are going to be at a much 

greater disadvantage if we cannot—and here is my concern, if you 

can help when Administrator Mills talks to the White House and 

as I talk to my colleagues. I am concerned that there is a growing 

approach to this issue of STEM and entrepreneurial visas. I think 

80-plus percent of my colleagues agree with the provisions of our 

legislation. We have to be careful that we do not take the approach 

that says, if we cannot do everything, we cannot do anything. This 

perhaps is more of a message to my colleagues, but it is certainly 

a message, I think, that is valuable for the White House based 

upon the President or the White House’s statement yesterday in regard to legislation pending today in the House of Representatives. 

My time has expired. I did not realize that I was on my soapbox 

as long as I was, but I would appreciate any advocacy for the immediacy of solving, addressing the issues that we face and to make 

sure that entrepreneurial skills and talent, as well as the environment in which they operate, is changed now, not sometime down 

the road. 

Thank you, Chair. 

Chair LANDRIEU. Thank you, and I will take a moment to respond to that. I would simply say, yes, we cannot wait to do everything while we fail to do some things right before us. But we also 

cannot just continue to do the easy things on immigration without 

doing the hard things, because in a democracy, you need the leverage to get the whole thing done. So we do not have to get into that 

argument now, but that is the resistance that you are feeling, and 

there is some resistance because we cannot just keep doing the 

easy things until we get some of the tougher things done that really affect the economy. 

And let me just add this, too, Senator Moran. To this morning, 

in terms of growth rate, the real domestic product rose this morning announced at 2.7 percent in the third quarter, which is the 

highest since the end of last year, and went over projections. It was 

projected to be, I think—it rose by 1.3 percent in the second quar-
35 

ter of this year, two percent in the first. They are going to uptick 

it to 2.8. They had estimated it, I think, to be two. 

So I realize that there are still some challenges, but as I stated 

in my opening remarks, we have lost seven million jobs in America, 

and because most of the jobs are with small business, you are 

right. We have lost a lot of small business jobs and we need to continue to work to improve that. 

Senator Rubio. 

Senator RUBIO. Thank you. One of the things I enjoy about being 

on this committee and talking about small business is that I think 

it is really the cornerstone of middle class, and middle class is what 

distinguishes us from the world. Every country has rich people. 

Unfortunately, every country has poor people. But what has really 

distinguished America and one of the things that makes us exceptional is this vibrant, broad-based middle class, of which I think 

small business is such a critical part of it. 

So a couple things I wanted to talk about that I have heard. In 

fact, as we were here—I do not know how they are watching us, 

maybe on C–SPAN or on the Internet—but a small business in 

South Florida texted me a question in real time. Here are two 

things they wanted me to mention. 

The first is, and I think some of it was referenced, Mr. Greene, 

in your opening comments—you wrote something about attracting 

the right human capital. There is this real concern that even if we 

have an economy that is creating a lot of small business and the 

jobs, if people do not have the skills to do those jobs, it is for 

naught. So what can we do, or what are we thinking about in 

terms of bridging that, for example, partnerships between our education system and our small businesses and our business community in general to ensure that we are equipping people with the 

skills they need for the new 21st century middle class jobs. You 

know, one of the things that I think we made a mistake in this 

country of doing, and I know some States are getting it right now, 

is we stigmatized career education and vocational education, and I 

think community colleges can play a tremendous part in turning 

the corner on that. 

So that is something that I hope you will address, in terms of 

what you are hearing from small businesses with regards to that, 

to the skills gap, in essence. You know, some people are saying 

there are jobs out there that cannot be filled because we do not 

have people with the skills to do them. What can we do to close 

that gap quicker? 

Mr. GREENE. So, a number of points, and if I may respond to 

both Senators in my comments. I think, first of all, in terms of the 

passion for start-ups and doing everything that we can to help entrepreneurship, I clearly share the passion of the committee members. 

I do want to suggest, Senator Landrieu, that to the question of 

high-growth entrepreneurs versus lifestyle entrepreneurs, in the 

economic environment we are in, it is not either/or. We need to do 

everything that we can to help all kinds of entrepreneurs. And it 

may be the case that different policies are needed to serve these 

different kinds of entrepreneurs, but we need an ‘‘all of the above’’ 

approach. 
36 

I think, secondly, similar to the comments that you talked about 

in terms of jurisdiction of different committees, it is critically important for us that many of the issues that we are talking about 

are not necessarily SBA issues, but that we have to be advocates 

in working with all the other agencies, whether it is USCIS or 

Labor or whatever the case may be, and that has to be a fundamental part of our role, and that is something that we take very, 

very seriously. 

On the specific issue of talent, we hear this over and over again 

from entrepreneurs, that this is critically important, both on the 

immigration side as well as on the skills side. And I think, critically importantly, while on the immigration side, legislative change 

is critical, and the President has obviously supported changes in 

high-skilled immigration as part of overall comprehensive immigration reform, but also there are things that we can do administratively. 

So one example of that is a little-known program called the OPT 

program that allows for graduates, Ph.D. graduates in STEM fields 

to stay after they get their Ph.D. for an additional year and a half. 

Well, what we found was the number of fields that were included 

in that program were limited. So we more than doubled the number of fields to include things like computer science, nanotechnology, math, to allow more people to stay. Now, it is a step. It is 

not the broad. But we need to be doing that on the urgency. 

Now, more broadly on skills, again, a critical issue, and we are 

seeing similar data to say there is massive mismatch. So a fundamental commitment to doing more on STEM education, at a minimum, is something incredibly important, something that the administration is focused on. 

And the one last point I would make on STEM is let us add an 

‘‘E’’ to STEM. Let us talk about entrepreneurship education as part 

of something we more fundamentally need to change. 

Senator RUBIO. And just the specific case that I am talking about 

is this is actually the epitome of a small business. It is a guy who 

used to work at a body shop who went out and opened his own 

body shop and he cannot find guys and gals that know how to do 

the work and he cannot afford to train them. So he has got to hire 

people with the skills to do that, but he does not have people who 

are trained to do it, and he cannot afford to train them, and there 

is nowhere for him to send them to be trained. 

So I am not saying you have the answer. I know it is a difficult 

thing we have got to accomplish. But I think that is one of the 

things we have to really concentrate on, is why are we not graduating kids from high school with an industry certification in a 

field, in a career? And we have got to figure out a way, what role 

the Federal Government can play in incentivizing that, because 

there are a lot of small businesses out there, and these are not 

poor-paying jobs. I mean, a BMW technician in South Florida, 18- 

year-old who graduated high school with that skill, is making in 

the mid-$30,000s to start, at 18, and can increase from there as 

they get more certifications. These are middle-class jobs. 

So I hope we will have a conversation about that component of 

it, because I am hearing a lot of that. 

Chair LANDRIEU. Thank you. 
37 

Senator Risch. 

Senator RISCH. Thank you, Madam Chair. 

First of all, let me thank Senator Snowe for her service to this 

committee and to America, which we sincerely appreciate. 

Gentlemen, I doubt there is any argument amongst Americans or 

Congress or anyone else that small business is certainly one of the 

cornerstones of the American economy. It does not get the play that 

it should get. When the CEO of a large corporation stands up and 

says something, it gets a lot of play. When a CEO of a small business who arguably is as important says something, it does not get 

the play, and that is very unfortunate. But I think most people understand how important it is. 

Once you drill down and you understand small business and how 

important it is, then the next item you look at is, well, what is it 

that makes small business work? And I think that, again, most everyone would agree that it is capital. If you do not have capital, you 

cannot operate a small business. You cannot go forward. It is the 

limiting factor, in my experience, in almost all small businesses as 

they try to expand, as they to operate their businesses. 

Well, today, as you know, there is a great debate going on here 

in Washington, D.C., over tax structure, and people who have an 

open mind on this are interested in facts. They want information. 

The question I have for you is, being advocates for small business, 

have you—has someone at the Small Business Administration sat 

down, taken the President’s proposal, and determined exactly how 

much cash, how much capital that that proposal will extract from 

the small businesses in America? Has anybody done that? 

Mr. GREENE. We are working with the White House on the 

broader range of implications for small business as part of tax reform. As you suggest, it is critically important and there are many 

individual components embedded in much of the legislation that 

this committee has endorsed in the broader, but we are working 

hand-in-hand to understand the implications of any changes on 

small businesses. 

Senator RISCH. Well, with all due respect, that is not good 

enough. I am looking for some numbers. We are constantly told 

that if the President’s proposal is enacted, it will greatly hurt a lot 

of small businesses in America, and I would like to know how 

many. I would like to know how much. I would like to know—so 

that people know when they are voting on this what kind of capital 

are they taking out of the hands of small businesses and placing 

in the hands of, in my judgment, probably the least effective entity 

in America, namely the Federal Government. People need to know 

this. I mean, this is money that creates jobs. It is—people whip 

around the rich people in this country, but the fact is, that is 

money that is going to employ middle-class Americans and we need 

to know how much. We need to know what the effect is going to 

be. And we need to know what the snowball effect of that is, how 

taking that money out of the hands of small businesses is going to 

affect us as we go down the road. 

So I hope you will take that question for the record. I hope you 

will get back to me on that. And I think that it will be important 

as people make a decision as to whether they should vote for this 
38 

proposal or perhaps use it as they negotiate forward to get us out 

of this horrible mess that we are in. 

Thank you, Madam Chairman. 

Chair LANDRIEU. Thank you, and maybe this will help, and I am 

going to submit this for the record—to you, Senator, and for the 

record of this committee. Prior to the Bush tax cuts that were put 

into effect, the average annual small business job growth was 2.3 

percent. After the Bush tax cuts, it was 1.0 percent. Now, there 

could be a different view of the material—a different analysis of 

the material that I am going to present for the committee, and I 

am looking at it for the first time, but I want to submit that. 

Also, the research that has been done by Tax Policy Center, U.S. 

Treasury Department, Center for Budget Priorities, and Congressional Research Service all have concluded that less than three percent of small businesses are even subject to the top two marginal 

tax rates. Now, that is not answering your whole question, because 

you have got capital gains, you have got dividends that are being 

debated, you have some other potential, I guess, benefits in the tax 

code that may no longer be there that could affect small business, 

but let us build a record on that because I think it is a very important question that the Senator has raised, and I would like to submit that for the record, but let us continue to get that information 

out as we debate this important subject. 

Senator RISCH. Madam Chairman, I am told that Treasury has 

said that at least eight percent of small businesses are subject to 

the two tax rates that we are arguing about—— 

Chair LANDRIEU. Okay. Well—— 

Senator RISCH [continuing] And that these businesses earn 72 

percent of all small business income and pay 82 percent of the income taxes paid by small business. 

Chair LANDRIEU. I am going to ask the staff to reconcile these 

so that we can have one set of facts that actually—— 

Senator RISCH. I think that is—— 

Chair LANDRIEU [continuing]. That we can really get to the nub 

of this, because I think this is a very important issue before the 

Congress right now. So I am going to ask both staffs to get together 

and report back to us on what they have found. 

All right. Thank you all so very much. We are going to have to 

go to the second panel now. 

[Pause.] 

We have got a large second panel, so I am going to go ahead and 

get started as people are taking their places and just introduce everyone briefly and ask you all to limit your comments to four— 

three-and-a-half to four minutes. 

Mr. Scott Gardiner is Executive Vice President of Granite State 

Economic Development Corporation, a regionally certified development company serving New Hampshire, Massachusetts, Maine, 

and Vermont. 

Fonda Lindfors New is founder and Chief Executive Officer of 

QRI, an LLC which is a multi-faceted environmental consulting 

company based in Baton Rouge, Louisiana, that specializes in geophysical assessments, drilling, and remediation. She is a successful 

small business entrepreneur. 
39 

Joshua Etemadi, Chairman of the Small and Emerging Contractor Committee through the National Association of Surety Bond 

Producers, serves on the Government Relations and Automation 

and Technology Committee. He is going to be testifying about his 

firsthand knowledge of the contracting surety bond situation. 

Senator Snowe has invited Mr. David Clough, Maine State Director for the National Federation of Independent Businesses, that 

will have a lot of comments about some of the issues we have discussed. 

Diana Furchtgott-Roth is a Senior Fellow at the Manhattan Institute for Policy Research in New York. From 2003 to 2005, she 

was Chief Economist at the Department of Labor. She brings a tremendous amount of expertise and leadership to this issue. 

And lastly, we have Julie Weeks, President and CEO of 

Womenable, a nonprofit social enterprise that works to enable 

women entrepreneurship worldwide. She is Executive Director of 

the National Women’s Business Council and has testified before 

our committee on several occasions. Welcome back, Julie. 

Let us start with you, Scott, if we could, Mr. Gardiner. Thank 

you for being with us. And let us set it at four minutes, please, because we really do want to get through everybody’s comments and 

get to our questions. 

STATEMENT OF SCOTT GARDINER, EXECUTIVE VICE PRESIDENT, GRANITE STATE ECONOMIC DEVELOPMENT CORPORATION 

Mr. GARDINER. Thank you, Madam Chair, Ranking Member, 

Senator Shaheen, and members of the Small Business Committee. 

Thank you for inviting me here today to provide my testimony regarding the SBA 504 program and specifically the SBA 504 refinancing program on small business companies. 

My name is Scott Gardiner. I have been involved with the SBA 

504 loan program since 1988. Over the last 24 years, I have been 

active in the management, marketing, loan structuring, and credit 

underwriting. I am the Executive Vice President of Granite State 

Economic Development Corporation, established in 1982, doing 

business in New Hampshire, Vermont, Maine, and Massachusetts. 

We are the leading 504 lender in the region and currently we are 

the number four CDC in the country. 

In February 2001, under the Small Business Jobs Act of 2010, 

the SBA implemented a temporary program allowing small businesses to refinance eligible fixed assets in its 504 program. Additional fees were charged to the borrower to cover the cost of this 

refinancing program, and as a result, no subsidy to the 504 program was needed. SBA continued to perform the full review of the 

loan applications in Sacramento in the Loan Processing Center. 

A key feature of this new program was that it did not require 

an expansion of the business in order to qualify. Borrowers were 

able to refinance up to 90 percent of the current appraised property 

value and use the funds to pay off business-related debt or other 

eligible business expenses. In today’s reality of more stringent 

banking regulations, many performing loans continue to be declined for financing. This is not because these borrowers are missing payments or need a bailout. It is simply caused by the drop in 
40 

commercial real estate values and the negative impact that drop 

has had on the banks’ policies. 

In the end, the availability to offer the 504 loan program to these 

performing borrowers was often the only option available to these 

businesses. The SBA 504 refinancing program created a unique 

and time-driven opportunity to refinance owner-occupied commercial real estate and capital requirement with long-term fixed-rate 

financing. 

The SBA began accepting applications in February of 2011. The 

initial utilization of this program was relatively insignificant nationwide given the restrictive regulations that were initially set 

forth by the SBA. As a result, only 307 SBA 504 refinance loans 

totaling $255 million were made nationwide during the first year 

of this program, and that is offset against an appropriation of $7.5 

billion, and $7.5 billion for each year. So there was $15 billion allocated, and in the first year, only $255 million was used. 

Finally, in October of 2011, SBA expanded the program parameters. However, to a large extent, the modifications set forth in late 

October of 2011 were not fully integrated into the small business 

lending community for several months. Granite State’s firsthand 

experience required the CDCs and the SBA to essentially remarket 

the program to overcome the initial restrictive guidelines from program launch in February. Activity started to pick up in March of 

2012, and through September 2012, nearly 2,700 small businesses 

have taken advantage of this refinancing opportunity by taking out 

$2.5 billion. On an annualized basis, during the months of August 

and September 2012 nationwide, 504 refinancing accounted for approximately 30 percent of the total 504 loan volume. 

With the end of the program in September of 2012, there were 

close to 400 loan applications that were left in the queue at the 

SBA in Sacramento, representing over $400 million. These are 

loans that were submitted and just because the program ended 

were not approved. 

Chair LANDRIEU. Scott, I really want to ask you to try to speak 

up a little bit. This is very important testimony to get in, and I 

have got my staff here and Senator Snowe’s staff. We are all ears. 

Are you testifying that the 504 commercial refinancing program 

was operated in such a way that it was too restrictive and virtually 

unusable to the businesses that you serve? Is that what your testimony is? 

Mr. GARDINER. Yes. I believe—— 

Chair LANDRIEU. Okay. Why do you not try to say that in your 

own words—— 

Mr. GARDINER. Based on my experience—— 

Chair LANDRIEU [continuing]. And speak into the microphone, 

please. 

Mr. GARDINER. Based on our CDC’s experience and my experience, when the program was launched, it was—in February, the restrictions were just too tight and very—— 

Chair LANDRIEU. Were they ever loosened to your satisfaction? 

Mr. GARDINER. Yes. They were loosened, finally loosened in October. There were a couple rounds of—— 

Chair LANDRIEU. Okay. And then the program expired when? 

Mr. GARDINER. In September. 
41 

Chair LANDRIEU. The following September? 

Mr. GARDINER. The following September. 

Chair LANDRIEU. So for the year that the rules got sort of in 

order, it worked, in your opinion, fairly well? 

Mr. GARDINER. Well, yes, but it took—the program was launched 

and we spoke to many small businesses that were inquiring, the 

small business community, and we had to say no so many times 

that I think the community, the small business lending community, 

just kind of turned the program off. 

Chair LANDRIEU. Okay. Well, would you suggest that if we try 

to do that again, we lengthen out the authorization period so it is 

not so short and use the new modified rules? Is that what you are 

testifying? 

Mr. GARDINER. Yes. Under the new modified rules, it works very 

well. 

Chair LANDRIEU. And that could be a four- or five-year extension 

if we could find the offset, because all of these extensions require 

an offset. But I really want to know this from the small business 

community because it is going to determine how hard I will fight 

for this or not, because there are about 100 other things that are 

pushing against the amount of money that we have. And so I am 

urging you all to speak with one voice on this. If this program is 

something that can work under certain circumstances, then we 

want to know what those circumstances are and not use the little 

money that we are going to be given to advocate for a program that 

is not having an impact, okay. 

So please visit with my staff after this, Scott, and give them— 

David Gillers is here. 

[The prepared statement of Mr. Gardiner follows:] 
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Chair LANDRIEU. All right. 

Fonda. 

STATEMENT OF FONDA LINDFORS NEW, CHIEF EXECUTIVE 

OFFICER, QUATERNARY RESOURCE INVESTIGATIONS, LLC 

Ms. LINDFORS NEW. Thank you, Chair Landrieu, Ranking Member Snowe, and members of the committee. My name is Fonda 

Lindfors New from Baton Rouge, Louisiana. I am the founder and 

CEO of QRI. My testimony today will focus on the legislative proposals currently before the Senate, including the SUCCESS and 

TEAM Acts. 

I was born in Charleston, South Carolina, and graduated from 

the College of Charleston in 1981 with a B.S. in Geology. Upon 

graduation, I moved to Louisiana and worked at the Louisiana Geological Survey as a geologist from 1981 to 1986. While working in 

the coastal zone for LGS, I noticed thousands of oilfield production 

pits that needed to be remediated and closed. Thus, QRI began in 

1986 to assist in the restoration process of coastal Louisiana by 

bringing oil field legacy sites into compliance. 

Over the past 27 years, QRI has grown through hard work and dedication of a staff that now produces annual sales of over $8 million, has completed over 4,500 projects, and provides services in six 

divisions. This geologist learned very quickly that my geologic education did not teach me about capital, contracting, how to administrate a business, strategic partnerships, and how State and Federal 

laws impacted my business, thus, many challenges were faced in 

the early years. 

I will say that the on-the-job training that QRI required vastly 

improved my prayer life in the early years. However, I would not 

recommend, ‘‘Oh, God, oh, God, please help me be a better business 

person,’’ as any business woman’s only plan to improve her administrative skills. 

The three biggest challenges QRI has faced over the last 27 years 

are capital, entering the Federal market, and winning Federal contracts, which to date we have won 77 Federal contracts in the last 

four years. We have provided specific examples of how QRI has 

overcome those challenges as a woman-owned business in our written testimony. 

One of the ways we overcame the challenges was to participate 

and attend every course offered by the SBA in our area. One of 

those courses, Emerging Leaders, or e200, required six months of 

efforts and continues to benefit the growth of QRI. I first became 

aware of e200 in an e-mail from Jo Ann Lawrence of the SBA. I 

contacted her to get additional details on the program and she assured me that the class would be well worth the vast amount of 

time it takes to take this course. 

She was correct. e200 was an excellent course that I attended 

from April to October 2011. The e200 curriculum was well thought 

out and included written resources that my upper management at 

QRI still uses, such as the Strategic Growth Action Plan. The instructor, Sherif Ebrahim, was an excellent teacher who pushed me 

to success in this course. The SGAP was so detailed that it was instrumental in increasing our bank accounts receivable line by 32 

percent. At the request of our major banker, an updated SGAP was 
47 

prepared and submitted in June of 2012 to once again successfully 

increase our AR line by another 24 percent. 

The difference between e200 and other private sector offerings 

that I attended is that the course was real world and not just a 

class where you learn terms to take a test and then you forget it. 

The e200 course allowed me to develop a valuable set of tools that 

are repeatedly used by my upper management. 

Today, Sherif Ebrahim continues to be a resource to me and my 

company. If I would have had the benefit of a program like e200 

in my early years of QRI, my challenges would have still occurred, 

but I would have achieved success more quickly. As a result of our 

participation in the 8(a) program and courses such as e200, QRI’s 

revenue and access to capital increased by over 50 percent from 

2010 to 2011 and staffing increased by 22 percent. 

QRI is extremely interested in changes to the EDWOSB program, also. In addition to removing the contract award price limits, 

removing the economically disadvantaged requirement, and adding 

sole source contract vehicles, QRI would like to ask the committee 

to consider adding a formal mentor-protege program. 

As the Chairwoman and other Senators have stated today, entrepreneurs are the backbone of our economy. With just a little investment from the Federal Government, small business owners are 

given the tools to thrive, and in doing so provide jobs that turn 

around neighborhoods. This bill is essential to many small businesses, economic future including QRI. 

I would like to thank the committee on behalf of QRI and small 

businesses for their attention to these important matters and their 

support for entrepreneurs. I would also like to thank the committee 

for their continued endeavors to make sure outstanding SBA employees, such as Jo Ann Lawrence, and e200 contractors, like 

Sherif Ebrahim, are funded and able to continue to assist companies such as QRI. 

I am happy to answer any questions on these issues and serve 

as a resource to this committee. Thank you. 

[The prepared statement of Ms. Lindfors New follows:] 
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Chair LANDRIEU. Thank you, Fonda, for that excellent testimony. 

We appreciate the specificity in which you identified some of the 

programs that have been helpful to you. 

Joshua. 

STATEMENT OF JOSHUA A. ETEMADI, SALES MANAGER, CONSTRUCTION BONDS, INC., A DIVISION OF MURRAY SECURUS, 

AND CHAIR, SMALL AND EMERGING BUSINESS COMMITTEE, 

NATIONAL ASSOCIATION OF SURETY BOND PRODUCERS 

Mr. ETEMADI. Chair Landrieu, Ranking Member Snowe, members of the committee, thanks for the opportunity to speak to you 

this morning. My name is Joshua Etemadi and I am a licensed 

bond producer with Construction Bonds, Inc., a division of Murray 

Securus, and I am testifying on behalf of the National Association 

of Surety Bond Producers, which is a national trade association 

that employs companies that hire people like myself. 

I have personally focused my career, albeit it kind of short, on 

assisting small and emerging construction firms to get surety credit 

through the SBA Bond Guarantee Program and also through the 

standard surety market. And if I have more time during the question period, I would be happy to share some case studies where I 

was able to use the SBA bond program to help contractors get 

bonds and are now very successful businesses. 

My testimony this morning will highlight the importance of the 

SBA Bond Guarantee Program and your efforts to enhance its 

reach. The NASBP extends its appreciation to the committee for 

recognizing and for taking action in the SUCCESS Act that the 

current contract limit of the SBA Bond Guarantee Program is insufficient and that it fails to comport with the realities of the current procurement environment for contractors seeking award of 

public construction contracts, especially Federal contracts. 

Now, the SBA Bond Guarantee Program was created to ensure 

that small and emerging contractors, which for various reasons 

cannot get standard surety credit, can get access to surety credit, 

and the program will provide guarantees anywhere from 70 to 90 

percent to surety companies as an enticement to extend surety 

credit to these firms. Now, the contractor and the surety company 

pay fees to access the program and the current contract limit is $2 

million. 

In recent years, the SBA has undertaken tremendous administrative efforts to improve the functioning of the program, for example, streamlining its application process, reduction in paperwork, 

implementing a fast track application for bonds up to $250,000, 

quickly responding to claims, and expanding the program’s reach 

to include design-build contracts. The SBA has also expanded its 

marketing efforts to bond producers and surety companies throughout the country and we applaud the SBA for taking these positive 

measures which could be magnified through statutory program enhancements. 

Now, recently, Congress recognized that the contract limit of the 

program should be increased to aid these businesses that are trying 

to get bonded contracts. Under the American Recovery and Reinvestment Act, Congress increased the contract limit from $2 million 

to $5 million, and up to $10 million in certain circumstances. They 
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also vested discretion in the program administrator to determine 

the program’s liabilities. We supported these important and needed 

enhancements, but unfortunately, they expired in September of 

2010. 

Now, by increasing the contract limit back to $5 million, the 

SUCCESS Act would restore these enhancements, but only in part. 

We continue to support increasing the contract limit of the Surety 

Bond Guarantee Program, but we believe that a higher contract 

limit of $6.5 million would allow the program to serve more small 

businesses. The NASBP also believes that the program administrator must be vested with statutory discretion to determine program liability to attract more surety company participation. 

Beyond increasing the contract limit, investing the administrator 

with discretion, we believe additional enhancements to the program 

are necessary to improve its effectiveness in providing assistance to 

small contractors and we request consideration of the following additional enhancements. 

One, raising the guarantees that are offered by the surety companies to a uniform level of 90 percent. 

Reducing the fees charged to businesses to access the program. 

Now, this could be done on a short-term basis to help small businesses with the current economic climate. 

And then support the current SBA efforts to establish a system 

of internal coordination between the Bond Guarantee Program and 

other SBA departments, like the Loan Guarantee Program and the 

Business Assistance Programs. And those recommendations are detailed more in my written testimony. 

The NASBP appreciates the opportunity to address you on the 

importance of enhancements to this program and I hope my testimony proves beneficial to your deliberations regarding the SUCCESS Act. I welcome any questions that you may have for me. 

[The prepared statement of Mr. Etemadi follows:] 
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Chair LANDRIEU. Thank you, Joshua, and please give us some 

additional information about how the SBA works with Governors 

and local governments and other organizations that are trying to 

provide the same kind of surety bond expansion so we can see if 

we are coordinated across the country, if you can provide some testimony later about that—— 

Mr. ETEMADI. Sure. 

Chair LANDRIEU. Okay. 

David. 

STATEMENT OF DAVID R. CLOUGH, STATE DIRECTOR, MAINE 

CHAPTER, NATIONAL FEDERATION OF INDEPENDENT BUSINESS 

Mr. CLOUGH. Good morning, Chair Landrieu, Ranking Member 

Snowe, members of the committee. My name is David Clough and 

I am very pleased to be here to testify on behalf of NFIB, the nation’s leading small business advocacy group. It has a typical member of eight to ten employees and about $500,000 in sales, almost 

the size of this committee a few moments ago. 

I would like to recognize the Chair and Ranking Member Snowe 

and their teamwork that they have showed over the years and recently in the tax extenders bill and working on behalf of small 

business owners across the country. It is very valuable. 

I also want to use this opportunity to underscore the tremendous 

contributions Senator Snowe has made to the State of Maine and 

to small business owners. It is with great sorrow that we heard last 

February that she had decided not to run for reelection, and also 

I can say that the legacy that she is leaving is one that is going 

to be hard to duplicate, in our eyes. But her accomplishments will 

be ones that have lasting effects for many years to come, so we do 

take comfort in knowing that and hope that when she leaves, she 

does not get out of her role as advocating for small business. 

I would like to also comment that one of the things that is of concern to small business owners, and what we are seeing, actually, 

policy leaders in the State of Maine and elsewhere, recovery from 

this Great Recession. Several years ago, the Economic Forecasting 

Commission of the State forecast that Maine would recover the jobs 

lost in the Great Recession in about five years. A few months later, 

they said it would take about seven years. The most recent forecast 

that came out earlier this month said it will take until 2017 to get 

back to the employment level that existed in 2007. That is not very 

encouraging for those who have lost their jobs, and it is not very 

encouraging for those who have graduated from colleges, community colleges and high school who are looking for jobs, and I will 

get back to that in a moment. 

One of the things that NFIB is learning from its members is 

there is a tremendous amount of uncertainty out there, and the uncertainty could be classified as uncertainty about economic trends 

and conditions. Is there a reliable enough trend going on that they 

can make business plans, they can go to a bank, they can make investment decisions? They have uncertainty about costs and things 

like the fiscal cliff, what decisions are made by Congress on that, 

decisions on Section 179 expensing, estate tax, the top marginal 

rate, and so forth. And then uncertainty about the Affordable Care 
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Act and what effect that will have on employment costs to businesses and new hires. 

And then there is an emerging uncertainty, too, that is not receiving a lot of attention that has been mentioned this morning. 

That is uncertainty whether a trained workforce will be available 

for the jobs that the businesses have, and I have heard manufacturers, for example, say they cannot find the people for the jobs 

that they have. They would happily—and it is not just in Maine. 

They cannot find them anywhere, for example, in New England or 

the Northeast United States. And it is not because of the Maine 

winters that they cannot find them. It is because they just do not 

have the skilled workforce. 

I would mention, though, that those are realities we have to deal 

with. One reality that is also important to recognize is the spirit 

of free enterprise and entrepreneurs. They are the people who will 

get the job done any way they possibly can, do more than expected 

with less than anybody thought was necessary, which I thought 

was a wonderful description of that kind of determination. They 

are the little engine that could. And one of the things that is terrific about them is they will do things that they did not even think 

were possible, but they figured that, somehow, some way, they will 

find a way to do that. 

NFIB looks forward to working with the committee and working 

with other groups to accomplish what this country needs, and that 

is more jobs. My last comment is, if every small business could create just one new job, we would not have an unemployment problem. Thank you. 

[The prepared statement of Mr. Clough follows:] 
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Chair LANDRIEU. Thank you. I say that constantly, and thank 

you for repeating it here. 

Diana. 

STATEMENT OF DIANA FURCHTGOTT-ROTH, SENIOR FELLOW, 

MANHATTAN INSTITUTE FOR POLICY RESEARCH 

Ms. FURCHTGOTT-ROTH. Chair Landrieu, Ranking Member 

Snowe, Senator Shaheen, thank you so much for inviting me here 

to testify today. And Senator Snowe, thank you so much for all 

your years of service and all the wonderful things you have done 

in this committee and also outside. 

Thanks also for holding this hearing today. This is really a vitally important issue. So the programs we have talked about today, 

the SBA programs, reach millions of entrepreneurs, but there are 

many more whom these programs do not reach. That is why it is 

important to look at the whole regulatory and tax structure of what 

entrepreneurs are facing. 

So if you are an entrepreneur today—and I am married to one 

entrepreneur, I am the mother of another entrepreneur—you do 

not know what your tax rate is going to be in a month. If you are 

at the bottom, you do not know if it is going to be ten percent or 

15 percent. If it is at the top, you do not know if it is going to be 

35 percent or 42 percent, including the phase-outs of the deductions and personal exemptions. About 48 percent of small businesses pay tax at the 35 percent rate, according to calculations 

from Internal Revenue Service data. If you are an entrepreneur, 

you do not know if the small business tax exemption, if the estate 

tax exemption is going to drop to $1 million and the tax rate rise 

to 55 percent, as is due on January 1. That means if you die the 

first month of January or before Congress has finished and sorted 

this out, your heirs might have to sell the business in order to pay 

the estate taxes. This is just a terrible situation to be with. 

It is not just the uncertainty of the fiscal cliff that is a problem, 

but the new health care act has real effects on small business and 

entrepreneurs because it takes effect as businesses move from 49 

to 50 workers. And, Chair, you presented evidence before showing 

that a smaller number of jobs had been created by business. Well, 

the Affordable Care Act discourages business from creating jobs. If 

you move from 49 to 50 workers and you do not have the right kind 

of health insurance, you have to pay penalties of $40,000 a year. 

Move to 51 workers, it is $42,000 a year in penalties. And that encourages businesses to keep employment below the 49—at 49 or 

below. You can, of course, solve this problem if you are an entrepreneur by laying off your full-time workers and hiring part-time 

workers, but that is not good for employees of small business. It 

is not good for the small business owners, who would, of course, 

prefer to have more experienced employees working for them. 

Another cloud of uncertainty lies over energy regulations. We all 

know the great American energy revolution caused by 

hydrofracturing. We look at North Dakota, three percent unemployment rate. Hydrofracturing, our new natural gas supplies, we have 

200 years of an inexpensive fuel. But guess what. The Environmental Protection Agency and the Energy Department have rules 

in the wings they are going to be rolling out over the next few 
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months that might stem that supply of natural gas. We do not 

know what those regulations are. And if you are a small business, 

maybe you are in the petrochemical area, maybe you are doing 

some subcontracting from one of these large companies, these regulations can just wreck your business. Plus, it would raise your energy costs. So that is another big source of uncertainty. 

I would really like to echo what previous panelists said about the 

need for immigration reform. There are innovators, entrepreneurs, 

all over the world who want nothing more but to come to America, 

and the Start-Up Act and the Kerry-Lugar bill would allow them 

to come for a five-year period and then get a green card if they 

managed to create jobs for native-born Americans. And I would underscore the importance of immigration reform, being an immigrant myself. 

Thanks very much, and I would be glad to answer any questions. 

[The prepared statement of Ms. Furchtgott-Roth follows:] 
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Chair LANDRIEU. Thank you for that excellent testimony. 

Julie. 

STATEMENT OF JULIE R. WEEKS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, WOMENABLE, AND CHAIR, ASSOCIATION 

OF WOMEN’S BUSINESS CENTERS 

Ms. WEEKS. Thank you, Chair Landrieu, Ranking Member 

Snowe, Senator Shaheen, for inviting me to be here with you today. 

I am representing not only myself as a woman business owner, but 

the 8.3 million women-owned businesses that are sitting behind me 

in the room, out in the world doing business, and I have, as Senator Snowe recognized at the beginning—thank you very much— 

been working in the vineyards of women’s enterprise development 

for quite a long time. 

We know from analyzing census data, conducting research, that 

women-owned firms continue to grow in number at rates one-anda-half times the national average. We have been saying all along 

in this hearing this morning, bemoaning the lack of small business 

job growth. Well, the only small businesses really in any great 

number creating jobs these days are women business owners. 

Other privately-held companies are not creating jobs and not generating revenue. Women-owned businesses are. 

I would suggest that part of the reason for that is the big bang 

of women’s entrepreneurship that happened back in 1988, the 

Women’s Business Ownership Act. We are coming up—next year 

will be the 25th anniversary of the Women’s Business Ownership 

Act, so it is very important to not only look at what the progress 

has happened since then, but to look at the major underpinnings 

of that Act and see, how can we make them better going forward. 

The four main tenets of that Act was extending the Equal Credit 

Opportunity Act of 1974 to include business credit. Up until that 

Act—Senator Snowe remembers this well—women business owners 

could not get business credit in their own name. It told the Census 

Bureau, please start counting all women-owned businesses, including C Corporations. It established the National Women’s Business 

Council, which gave women entrepreneurs a voice. And it established the demonstration project, which has grown into the 106 

Women’s Business Centers today. I would suggest that those four 

areas are continuing to be important. 

Another key area, though, that is of great importance is access 

to markets. As some folks may realize, or remember back to 1988, 

there was a provision in the introductory bill of H.R. 5050 that included a Women-Owned Small Business Procurement Program. It 

was removed to ensure passage of the Women’s Business Ownership Act of 1988 and it was only—the five percent procurement 

goal was only put in the mid-1990s. The Women-Owned Small 

Business Program, as we all know, took a long time between passage and implementation, and we need more teeth to that Act. 

I would suggest—I have three specific recommendations for consideration for this committee, the first one of which is to eliminate 

that monetary limit on the women-owned small business contracts 

tool and to allow agency purchasing to be reserving procurements 

specifically for women-owned small businesses. Once women-owned 
84 

businesses get into procurement, the playing field, we have seen in 

research, is relatively level, but getting in is the challenge. 

Secondly, Women’s Business Centers is a very critical, important 

program. Senator Landrieu, I love your idea of naming it the Olympia Snowe Women’s Business Center Program. I think, personally, 

that would be a marvelous idea. But I believe—we have been talking this morning and the folks from the SBA said that they are 

going to be harmonizing and analyzing the outcomes of SBA’s Entrepreneurship Development Programs in commonality, but I would 

suggest that if we are looking at the only point of comparison between the three programs of SCORE, SBDC, and Women’s Business Centers, which is one-on-one counseling, we are missing the 

majority of the activities that Women’s Business Centers perform. 

They not only provide one-on-one counseling, but training, mentoring programs, peer mentoring, incubator programs, access to 

capital, either directly or loan packaging. We are not capturing the 

full value of the Women’s Business Center Program. 

And, finally, I would recommend that we maintain analysis and 

research and information on women- and men-owned businesses. A 

survey of small business owners of the Census Bureau has also 

been under the knife. I realize that is not under the purview of 

your committee specifically, but I do know that in the Women’s 

Business Ownership Act, you directed the Census Bureau to start 

counting all women-owned businesses. I have a couple of ideas of 

some additional analysis that the census could perform to better 

understand the growth continuum of women- and men-owned businesses that is included in my written testimony. 

And I guess, finally, even though I am running a tad over, if I 

am the last person to testify at a hearing, a Small Business Committee hearing, being co-chaired by Ranking Member Snowe, I 

want to, on behalf of all women business owners all around the 

country, thank you. Thank you very much for your service. 

[The prepared statement of Ms. Weeks follows:] 
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Chair LANDRIEU. Thank you, Julie. 

We are going to have to bring this committee to an end in about 

12 minutes, so we are going to each take four minutes for questions, and thank you all for your excellent testimony. So if your answers can be very brief. 

David, let me start with you. It is quite a conundrum that you 

have testified, and it is true, that we have lost many businesses in 

the United States through this great recession, and you testified in 

Maine your experiences with NFIB. But on the other hand, you 

said that when business owners go to hire, there is a lack of human 

capital. What is NFIB’s position on training, or does NFIB have a 

position on investments in training for human capital that is already here in the country? We have heard about immigration, people coming in with skills from other countries and getting the 

Ph.D. or the Master’s degree here. But what about people that are 

here in the country that need Ph.D.s and Master’s degrees? What 

is NFIB’s position on those investments? 

Mr. CLOUGH. I do not have a detailed answer for you, Chair 

Landrieu, on that. I will get an answer to you after this hearing. 

It is something that they are beginning to recognize, they are spotting in their periodic surveys of problems and priorities. And what 

it is is it is the skills, that people have the skills that are needed 

in the workplace. It is something that they are hearing about, we 

are hearing about, and it is even showing up—I think McKinsey 

did a report on the global shortage of skilled workforce. So it is not 

just the United States. It is other developed countries. 

Chair LANDRIEU. Well, I would really look forward to that and 

really urge the NFIB to come with some strong suggestions about 

whatever methods, approaches, investments to develop the skill set 

of Americans that are already here as well as people seeking to become citizens of our country. 

Diana, let me ask you this. When you talk about—and we struggled with this when we did this health care bill, believe me. It was 

a topic of much discussion, about where to set the requirement for 

businesses to maintain health insurance for their employees. And 

as you know, I fought very hard to move that limit up from 25, 

which was originally proposed, to 50. And we recognize the challenges of that. But on the other hand, to have a system of health 

care that is a public-private partnership, where individuals have to 

take responsibility, where businesses have to assume some responsibility, and government has to assume some responsibility, how 

would you craft the ramp effect, if you would? 

We are not going to repeal the Affordable Care Act. It will not 

be repealed. So in implementing it, how would you suggest that the 

ramp effect between the 49th and the 50th or the 50th and 51st 

employees—do you have any suggestions about how to make that 

less of a barrier to hiring or a more able way for small businesses 

through the subsidies, maybe, to help them to provide that health 

insurance that is important for their workers? 

Ms. FURCHTGOTT-ROTH. I would say that the government should 

not require businesses of any size to provide health insurance. We 

should allow individuals to choose the health insurance they want, 

just as they choose auto insurance and home insurance. We never 

hear someone say, oh, my goodness, I am losing my job. I am not 
91 

going to be able to drive because I do not have auto insurance because they purchase it outside from the employer. That is what we 

need to do in this case. We also need to have a wider variety of 

plans available on the exchanges, not just the qualified benefit 

plan. People need more choice—— 

Chair LANDRIEU. Well, I could not agree with you more. I could 

not agree with you more. And there was a bill that I actually supported that would have done just that. But I will be honest with 

you. It was too far of a reach for the Congress to move from a system traditionally of employer-sponsored health care, with many of 

our largest employers already sponsoring health care, to move to 

a complete private individual model. So what Congress did was try 

to find a balance between preserving the best of the employer-sponsored plans but allowing that individual freedom of choice through 

exchanges that, ironically, some of the more conservative Governors in our country were refusing to set up, exactly what you 

said, to give individuals the freedom to get their insurance not attached to their employment. 

Ms. FURCHTGOTT-ROTH. Right. 

Chair LANDRIEU. So this is a real conundrum. My time is finished—— 

Ms. FURCHTGOTT-ROTH. If you look at Congressman Price’s Empower Patients First Act, that would allow individuals to bring to 

their employer some kind of refundable tax credit. The employer 

would then purchase the insurance for them at whatever plan they 

choose. Then when the employee leaves for another job, he does not 

have to switch plans. The new employer can move the subsidy, if 

the employer has a subsidy, to the same plan, kind of like with a 

401(k) plan where you can just roll it over and you do not have to 

liquidate it. 

Chair LANDRIEU. Well, we are going to continue to work on this. 

Senator Snowe. 

Senator SNOWE. Thank you. I will be a fast talker. And I want 

to thank all of you for your very impressive testimony. 

David, let me start with you. I am going to ask one question of 

the panel. Given the current situation regarding the fiscal cliff and 

the much debated issue about whether or not you can draw and delineate a line regarding a small business exemption regarding the 

top tax rates, David, do you think it is possible—and it is an important issue because 50 percent of all income above the $250,000 is 

attributable to pass-through income—do you think we can draw 

that line, and how? 

Mr. CLOUGH. I am going to beg off on the how. I will just mention on drawing the line, the NFIB has been considering that. I will 

let them get back to you and the committee with a more specific 

answer. They have done a study. They are aware of the Ernst and 

Young study, for example, that suggested there could be very significant job losses over the long run, depending on where the line 

is drawn. And also, I think, the Congressional Budget Office 

showed in the short run that there could be some significant job 

losses. The exact place, based on what I hear, is going to vary in 

some respects on the business, as well, and what stage of development the business is in. 
92 

Senator SNOWE. Julie, do you want to add anything? And I hope 

I am here for the 50th anniversary of the Women’s Business Centers, someplace in the world. 

Ms. WEEKS. Whatever happens, you are going to have to be 

there. We will definitely invite you. 

I am supposed to answer a fiscal-related question, too? 

Senator SNOWE. Yes. 

Ms. WEEKS. Well, I think that given that the only growth that 

has been happening has been happening with women’s entrepreneurship, continuing to support a non-one-size-fits-all but a targeted approach is certainly key. I think that the uncertainty over 

what is happening here in Washington is the most critical element 

to all small business owners, male or female, with how are they 

going to grow their business. 

So I guess my primary reaction and advice is just please do 

something. The churning and the lack of activity is causing perhaps more grief and lack of growth than having a problem—or putting a solution out that not everybody agrees with. I think it is just 

critically important. If we do not get our act together here in Washington before the end of the Congress, it is really going to be a horrible situation for all small businesses—and large businesses, too. 

Senator SNOWE. Ms. Furchtgott-Roth. 

Ms. FURCHTGOTT-ROTH. Yes. We can see that tax rates have consequences. We can see how, right now, companies are rushing to 

pay out dividends before January 1 because they think the tax on 

dividends is going from 15 percent to 44 percent. There will be 

other consequences of raising the tax rate for small businesses. 

They will make fewer investments. More of them will go offshore. 

They will cut back on job creation. And it is extremely important. 

As President Obama said in 2010—in 2010, he said—in December—it is not time to raise the tax rates because of the current economic situation. Well, economic growth is slower than it was in 

2010 and we need to make sure that we do not kill the goose that 

lays the golden eggs. 

Senator SNOWE. Thank you. 

Mr. Etemadi. 

Mr. ETEMADI. Well, I do not know if I have a response to that 

regarding the fiscal cliff, so I will just pass. 

Ms. LINDFORS NEW. What we have done at QRI, because of the 

uncertainties up here, is we have focused our business development, and again, this was in our SGAP plan, on issues that are 

going to have to be addressed no matter what. One of those issues 

is the infrastructure of the Mississippi River levee. We have done 

multiple projects where we are installing relief wells on the levees. 

They are either going to get installed or the levees are going to fail. 

Congress is not going to let that happen and they are going to have 

to put in emergency funds to do that. 

The other work that we are very focused on is coastal restoration, obviously, being from Louisiana. We were very involved in the 

Hurricane Katrina recovery. Our small company is working for the 

Coast Guard. We are doing the biological assessment for the BP 

Deep Water Oil Horizon job. We are installing flood gates in Rockefeller Refuge for the State of Louisiana. 
93 

So we are focusing on work that is going to have to happen over 

the next several years, and by then, with our great leadership that 

we have—thank you, Chair Landrieu, and I am really saddened 

about you retiring, Senator Snowe. I mean, you have been incredible—— 

Senator SNOWE. Thank you. 

Ms. LINDFORS NEW [continuing]. For women-owned small businesses, and small businesses in general. Surely, over the next couple of years, you all are going to have all this straight, because if 

I know if I can take my small business—talking about a fiscal cliff, 

we faced our own fiscal cliff and we figured out how to get around 

it. You all can figure out how to get around it, too. 

Senator SNOWE. We could not agree with you more. 

Chair LANDRIEU. Fonda, we could not agree with you more. The 

two of us talk all the time. If we could just write the bills and pass 

them, we could fix it and it would get done. Unfortunately, we have 

got a big Congress to run into. But the two of us kind of see things 

very similarly, trust me. But go ahead, and I am sorry. And we 

have to—can we move on to—— 

Senator SNOWE. Yes. 

Chair LANDRIEU. Okay. Can we get to Senator Shaheen, and we 

have been joined by Senator Ayotte. 

Senator SHAHEEN. Again, thank you all very much for your testimony. We appreciate it. And I think the point you make about certainty is a very important one, and certainly I believe that we are 

going to get this done. It may be messy, but it is going to get done, 

and what I hope all of you will do is encourage the businesses that 

you work with and your own businesses to urge Congress to act. 

You do not have to tell us how to act, but just say, get it done, because it is very important. 

Scott, I want to go back. Chair Landrieu picked right up on what 

you were saying about the restrictions on the 504 refi program. It 

is something that we talked about as that program was ramping 

up and we tried to weigh in in a way to address some of your concerns. But I wonder if you could elaborate just a little more on the 

changes that were made to make the program more effective and 

whether you think it is now working adequately and what you see 

in your region, which includes New Hampshire and much of New 

England, in terms of the interest that would be out there amongst 

small businesses if the program continued. 

Chair LANDRIEU. And, Scott, before you answer, let me turn the 

gavel, I think appropriately, to Senator Snowe for her to close out 

this meeting. I have got to leave for a pre-scheduled event, and I 

am very, very sorry. But I am going to turn the gavel over. She 

definitely knows how to use it—— 

[Laughter.] 

And she will finish this meeting, hopefully in the next ten minutes, because I know members have to leave, including Senator 

Shaheen. But thank you so much. 

Mr. GARDINER. Thank you. Let me say this. The program is 

working very well right now. The changes made in October of 2011 

really have a good handle on the program and the needs of the 

small business. And the changes that took place were the SBA 

opening the program up to allow many more businesses to access 
94 

the program by taking the debt that they had on the real estate 

and not limiting it to a two-year—that the debt had to be maturing 

within two years. So that was one of the primary repositionings 

that the SBA took. 

But the program is working very well, I think as evidenced by 

the existing applications at the SBA. Over approximately 400 applications are sitting there waiting to be approved. Those affect 

jobs in New Hampshire, Maine, Louisiana. All the States across 

the country have applications in there. So there is a strong demand 

for this program. 

And one point I would like to make on jobs. These are businesses 

that are existing businesses. They have gone through the recession. 

They have had to lay off staff, I am sure, to maintain business. 

And now they are operating very lean. When the economy turns 

around, these businesses that we are assisting by reducing their 

cash flow, freeing up cash, they will be able to use that to create 

more jobs. When they start growing, they are going to immediately 

start hiring new staff. So I think that is an important point. 

Senator SHAHEEN. A very good point, so that this is a real opportunity to create jobs if we can extend the program. 

Mr. GARDINER. Yes. 

Senator SHAHEEN. Mr. Etemadi, you talked about wanting to see the increase on the surety bond guarantee go from $5 million to 

$6.5 million. Do you have any data or any analysis that shows 

what that might be able to do in terms of job creation and the businesses that that might help if we were able to increase it? 

Mr. ETEMADI. Well, I can tell you that the average small busi- ness contract by the Department of Defense was $5.9 million, and 

so having it increased to $6.5 million would be beneficial to small 

businesses trying to access that program. And on top of that, 

the—— 

Senator SHAHEEN. And do you have any numbers, any estimates 

that you all have about how many businesses would be affected if 

that increase happened? 

Mr. ETEMADI. I would have to check on that, but—— 

Senator SHAHEEN. If you could, that would be information that 

I think would be very helpful to the committee. 

Mr. ETEMADI. Sure. 

Senator SHAHEEN. Thank you very much. Thank you. 

Senator SNOWE [presiding]. Yes, and thank you. 

And now I would like to recognize the other colleague from 

neighboring New Hampshire, Senator Ayotte. 

Senator AYOTTE. Thank you very much, Chairman Snowe, and I 

also want to thank my colleague from New Hampshire, Senator 

Shaheen. I appreciate all the witnesses being here today, and you 

obviously have discussed very important issues that impact small 

businesses, which in our State, of course, is the heart and soul of 

our economy. And I will echo what has already been said here, that 

we hope to resolve the issues that are impacting the fiscal cliff and 

we need to do it in a way that does not hurt economic growth, because with the fiscal state of the country and $16 trillion in debt, 

we not only need to deal with the drivers of our debt, but also grow 

our economy if we are going to recover. So I know the issues that 

you discussed and I appreciate your testimony on those issues. 
95 

I wanted to also thank Mr. Gardiner for being here today. I know 

that this panel appreciates your input and your expertise on the 

proposed 504 refinance extension and I want to thank you for the 

overall important work that you do with businesses in New Hampshire. So I just have—and I know that we are going to meet later 

to discuss those and I look forward to that meeting. 

I have a couple of questions related overall to that program. 

Number one would be we know that the refinance program expired 

on September 27, as I understand it, and that in New Hampshire, 

the Granite State provided ten of the 504 refinance loans for about 

$9.4 million. You also noted that there were 396 refinance applications, or you said, roughly, just a minute ago, about 400 applications, and there is strong demand for the program, with an aggregate value of over $424 million that are left in the queue, so to 

speak. 

Mr. GARDINER. Correct. 

Senator AYOTTE. Can you give me an estimate? If we were, for 

example, to approve the program for another year, how many are 

in the queue for New Hampshire? How many do you think would 

be eligible for approval in New Hampshire? I am just trying to get 

a sense of our own State. 

Mr. GARDINER. I think for New Hampshire, we see the volume 

representing approximately 30 percent of the overall 504 volume. 

So it is a little bit hard to judge, but I would guess, easily, 25 to 

30 loans that could be approved. 

Senator AYOTTE. Estimating. 

Mr. GARDINER. Estimating. In New Hampshire. 

Senator AYOTTE. Okay. 

Mr. GARDINER. Yes, in the next 12 months. 

Senator AYOTTE. And this may have been addressed earlier, and 

if it was, I certainly apologize for that, but one of the key justifications for the program itself, and I believe you touched on this in 

your testimony, was originally contained within the Jobs Act of 

2010, was really what we saw as a drop in the commercial real estate market. Really, commercial real estate prices at that time 

were dropping. And today, we have seen, thankfully, some improvement in that market. And according to estimates, the prices have 

been rising, and fortunately, some of the vacancy rates are falling, 

showing some rebound. 

And my question, compared to where we were when we were 

looking at extending this program in 2010 under the Jobs Act when 

we established it—so one question I think is an important question 

to address is if the commercial real estate market is improving, 

why should we extend the program? And I think that is, obviously, 

a fundamental question when we have a lot of other competing interests and we want to make sure that we address programs that 

are most effective, and I do not doubt the effectiveness in New 

Hampshire, but I thought that was a very important issue for you 

to address. 

Mr. GARDINER. A large part of it is the decline in the commercial 

real estate market, but another issue is just the bank—the commercial banks out there have changed their policies because of the 

recession, I think, and the downturn. They have tightened up their 

credit policies. They are not—even though there may be equity in 
96 

real estate and the equity may be improving, the banks have not 

come around to lending as they did in the past. So I think this program helps the banks to leverage the real estate to allow those 

businesses to use that equity so that they can restructure their 

debt. So you are basically taking short-term debt that may be used 

for term loans, short-term equipment financing, and allowing the 

bank to restructure it, use the equity in the real estate and turn 

it into long-term debt. So you are immediately improving the cash 

flow of the business. And these are strong businesses. They have 

been proven. One of the criteria is that these businesses have never 

missed a payment in the last two years. So we are not talking 

about risky businesses that we are just trying to bail out. 

So the commercial real estate market or the commercial real estate values, although it is climbing, I think it has got a long way 

to go before the banks are able to restructure and help the businesses like this refinance program can. 

Senator AYOTTE. I see my time is up. I know we will have a 

chance to spend more time together in the afternoon. I certainly 

appreciate everyone on the panel. This is a very important time for 

our economy and making sure that we have the best climate for 

small businesses, in particular, to thrive and grow. So I thank you 

all. 

Senator SNOWE. Thank you, Senator Ayotte. 

Again, I want to thank each and every one of you for being here 

today, for submitting your testimony on how to approach these critical issues confronting small businesses and the role that each of 

you play in your respective arenas. And also, I thank you for your 

patience, for waiting until you had the opportunity to testify. 

Again, I want to reiterate how crucial it is that these decisions 

that we are going to be making, as you well know, in the remaining 

weeks of this legislative session could really determine the outcome 

for the future of our country, all the issues surrounding the fiscal 

cliff, and most notably how it is going to affect the entities of small 

businesses that we depend upon to create those jobs. 

I noted that there had been a letter submitted by so many small 

business organizations to the Congressional leadership regarding 

these issues and representing millions of pass-through business entities, as they say, employing tens of millions of workers, urging 

Congress to pursue comprehensive tax reform and entitlement reform to reduce our long-term debt. The point here is making sure 

that we do not create adverse consequences to those that you represent and are a part of, and that is the job creators. I mean, it 

is absolutely an imperative for the future. Hopefully, those lines 

can be drawn, because I think it is going to be—otherwise, it will 

have profound impact on the future of this economic recovery. 

You know, it happens to be the worst recovery in the history of 

this country. I am stunned by the numbers that you mentioned, 

David, regarding Maine, for example, and having to defer and 

delay the years by which we are going to return to the pre-recession levels of 2007 for employment. I mean, it is stunning now it 

is 2017. 

And so the more we hesitate and delay and defer and obfuscate, 

the more this lingering uncertainty is going to cast a shadow over 

our ability as a country to create those jobs that people desperately 
97 

need and certainly deserve, not to mention, as you have raised here 

today, is what are the jobs for the future, and that is another major 

issue. And we can never get to those questions because we are still 

dealing with the ultimate economic issues for far too long. 

So I know we can do it. Hopefully, there will be that bipartisanship that is the final ingredient that can make it possible. So I 

thank you again for being here today. 

The hearing is adjourned. 

[Whereupon, at 12:30 p.m., the committee was adjourned.] 

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